FOMO remains alive and well in the cryptocurrency world, with lesser-known tokens outperforming again in the wake of recent rallies staged by industry leaders Bitcoin and Ether.
Cardano has doubled this month, becoming the third-largest digital asset. Binance Coin is also up. A token named Avalanche has tripled in August. Meanwhile, prices for digital photos of rocks with laser eyes and cartoon depictions of cute animals are going gangbusters, sometimes quadrupling in a matter of days.
Among analysts and investors, there’s little consensus as to what’s driving parts of the frenzy. Some posit that speculators are moving from the mainstays to newer, more exciting offshoots, as they often do after big runs. Others see a world awash in cash and ultra-low rates, which ultimately pushes investors toward ever-wonkier assets. A few tokens are backed by strong narratives, such as technological advances at the Cardano and Solana networks.
“There’s no doubt that there’s a lot of excitement in crypto,” said Yoni Assia, founder and chief executive of online exchange eToro. “You can definitely see it within the numbers in the industry, whether it’s looking at total volumes or looking at growth of companies,” he said, adding that “we’ve seen a lot of exuberance in the market.”
Assia calls it a “generational buying moment” and cites a confluence of events, including rock-bottom interest rates worldwide, as well as massive fiscal stimulus efforts that delivered checks to many people during the pandemic.
Some of that money has gone toward cryptocurrencies and related assets, such as stocks of digital miners. About 15% of Americans who received the first two stimulus checks invested part or all of the money, and about half of this group invested specifically in cryptocurrencies, according to a survey of more than 1,000 U.S. adults conducted by The Harris Poll for Yahoo Finance.
At the same time, inflation has materialized as economies reopen, playing into the warnings from some crypto faithful of pending hyperinflation. Put all that together and it’s “leading a lot of people to look for various types of investments,” Assia said.
A recent survey by eToro found that roughly a quarter of the 6,000 investors queried own crypto, a number that increases to nearly 50% for the younger cohort. The company also found that the average investor was set to increase their crypto allocation in the coming months and that interest in alternatives to Bitcoin and Ether, or altcoins, is “significant.”
Meanwhile, downloads for crypto trading apps are rising—Coinbase Global Inc. ranked 11th among finance apps in Apple’s iPhone downloads, according to App Annie, a mobile data and analytics provider. It averaged 23rd within its category last August. Digital exchanges Kraken, Voyager and Crypto.com have also advanced in the ranks.
“With all of this money floating around, we should not be surprised that there are people paying exorbitant amounts of money for digital pet rocks and an endless amount of other digital assets that can be easily created,” said Michael O’Rourke, chief market strategist at JonesTrading.