Around seven of the top 20 biggest crypto assets are smart contract tokens, including ether and dot , solana and cardano . BofA analysts also pointed to smart contract tokens and the blockchain-based applications they power as similar to growth stocks in the equities world, typically technology shares. "We expect 2023 to be the year of token price divergence," analysts at Bank of America wrote in a Feb. 24 research note.
BITCOIN STILL BOSS Bitcoin has long traded in tandem with tech stocks, but that cord may be fraying just as smart-contract tokens increasingly take up its crypto super-growth mantle.
The cryptocurrency's 30-day correlation with the Nasdaq turned negative on Feb. 23 for the first time since early December, where a measure of 1 indicates the two assets are moving in lockstep. Some crypto watchers say the relative strength in smart-contract tokens this year points to a solid performance by the most established DeFi protocols despite the market ructions of 2022. They caution, though, that the global macro outlook and central bank policy could hit the growth of crypto projects and their associated tokens.
James Butterfill, head of research at CoinShares, warned it was also too early to call a major divergence in crypto. Indeed, bitcoin's shadow still looms large over the sector, with its share of the total crypto market capitalization up slightly to 40%, from 38% at the start of the year.
But on the other hand, Butterfill said such departures could be a potential sign of the cryptoverse growing up.
"We should be increasingly adopting the view that the
market, as it evolves, will become more sophisticated and more
mature, and we will start to see that price divergence."
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(Reporting by Lisa Mattackal in Bengaluru and Hannah Lang in
Washington, D.C.; Editing by Vidya Ranganathan and Pravin Char)
