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Litecoin outperforms, as Ethereum, Ripple ease


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The cryptocurrency majors had a difficult start to the year, as the recovery that has started in December failed to gain the momentum the bulls were hoping for.

Bitcoin remained capped below the $4100 mark and gave back up to 20% of gains from the month high. Though the biggest cryptocurrency represents more than 55% of the market capitalization alone, January shred 10% off its total market value. While the Bitcoin sell-off had a negative impact on most cryptocurrencies, Litecoin and Tron recorded a relatively good performance during the first month of 2019.

Litecoin, Tron outperformed in January

Litecoin, which has successfully held ground above the $30 mark despite the market rout, surged by 78% against Bitcoin, from 0.0065 to 0.01155. Litecoins market cap remained stable near $2 billion in January.
Charlie Lee, the founder of Litecoin, said he is now focused on making Litecoin more fungible by adding Confidential Transactions. Lee added that fungibility is the only property of sound money that is missing from Bitcoin & Litecoin. Now that the scaling debate is behind [us], the next battleground will be on fungibility and privacy.

Although there is no preset date for the upgrade, a soft fork in 2019 is being priced in by the market.

Tron has been another outperformer in January. The TRX ranked among the top ten best performers last month and a unit of TRX multiplied its value by more than 2.5 against Bitcoin.

Tron started the year on a positive spin on two main reasons.

First, the positive investor sentiment has been building since late 2018, on the back of the news that its blockchain now operates more transactions than Ethereums. The number of decentralized applications on Trons platform has tripled in less than two months, as Tron has become the go-to platform for developers looking for faster transactions and no fees. The average transaction fee fell to the all-time low of 0.1% in December.

While in turn, Ethereum which is seen as its major rival, had to postpone its Constantinople hard fork for at least one more month to fix a technical bug in its program and charged an average transaction fee between $0.06-0.08 since the beginning of the year.

Second, Tron, which acquired the popular file-sharing platform BitTorrent in July 2018, had also announced that it would airdrop BitTorrents BTT tokens among the TRX holders. Since then, TRX holders certainly found it more interesting to hold the TRX instead of selling them. This could have given a significant support to TRX during the times of sector-wide sell-offs. As a result, Trons market cap increased by 14% in January, the TRX became the 8th biggest cryptocurrency by market cap.

Ethereum, Ripple eased

Ethereum slid more than 35% from the January 5 peak, amid the Constantinople hard fork got delayed to the end of February due to an important bug in its program, which would allow hackers to steal users funds. Ethereum, which advanced to 0.05 versus Bitcoin ahead of the fork saw its price halved by the end of January. The ETH/USDT tested the critical $100 support.

Traders will likely remain cautious on pending event risks and increased volatility ahead of the next scheduled Constantinople hard fork. The fact that the latter has already been delayed twice gives little maneuver margin to developers this time.

But it is worth noting that despite statistics showing a stronger competition from Tronix, the numbers remain heavily biased and Ethereums supremacy as the markets largest dapp platform is not seriously threatened just yet. Ethereum continues hosting a clear majority of decentralized applications with a decent number of users, while many dapplications on Tronix have little-to-no active users. 95 tokens out of the top 100 still operate on Ethereums platform.

In the meantime, a unit of Ripple lost up to 40% of its value against the USDT since its December 23 peak, despite the development of encouraging projects for cross-border payments. Ripple even targets the Chinese market, not to push for the adoption of its cryptocurrency of course given the governments clear position against crypto-assets, but to expand Ripples services on cross-border payment solutions to the Chinese financial industry. Interestingly, the Chinese news had little-to-no positive impact on Ripples market value. For now, the Chinese penetration appears to remain a taboo among traders.

Nonetheless, Ripple more than doubled in value against Bitcoin since August 2018 and stagnates on the upper range of the past six months.

Divergence between Bitcoin Cash ABC and Bitcoin Cash SV

Bitcoin Cashs November hard fork certainly had a bigger negative impact on traders than thought, as both Bitcoin Cash ABC and Bitcoin Cash SV find it difficult to attract investors on board.

Bitcoin Cash ABC, which is the continuation of the original Bitcoin Cash, lost more than 70% of its total market capitalization since the November 15th hard fork, while Bitcoin SV steadily erased $830 million (> -40%) since end of November.

Bitcoin Cash ABC and Bitcoin Cash SV both lost up to 37% against the US dollar in January, yet Bitcoin Cash ABC managed to rebound by roughly 20% toward the end of the month. Bitcoin Cash SV, on the other hand, extended losses to the all-time low levels ($60). A further divergence in favour of Bitcoin Cash ABC is plausible in the coming months, as Bitcoin Cash SV appears to remain on the backfoot and may not gather enough momentum to rebound on an eventual market recovery.

Bitcoin Cash ABC regained the 5th position by market cap, while Bitcoin SV remained far behind, at the 11th place at the end of January.




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About the author


Ipek Ozkardeskaya is a senior analyst at MBAex with a solid experience in the financial industry. She has strong technical background in economics and quantitative finance. Previously, she worked as a senior market analyst in London Capital Group, FX strategist in Swissquote Bank and as a client sales executive at HSBC Private Bank in Geneva. She also developed quantitative models in automatic trading as part of BCV’s Structured Products team. Ipek has a Master’s degree in Financial Engineering & Risk Management and a Bachelor degree in Economics from University of Lausanne.
 
Contributing  author since 11/09/2017

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