5 Altcoins That Produced Double-Digit Gains as Bitcoin Price Rises in January

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The rally in cryptocurrency markets began in early January with a spike in heavily shorted altcoins and Ethereum (ETH) liquid staking derivative tokens due to the upcoming network upgrade in March. Soon the gains began to appear across the board as buyers began to catch up.

Improving macroeconomic conditions, such as lower inflation and a stable employment sector in the United States, provided additional tailwinds for the positive recovery. Bitcoin (BTC) is on its way to its most impressive January close since 2013. Its price is up 40% year-to-date from the opening value of $16,530.

Another significant catalyst for the January 2023 rally was a short pressure in the crypto market. After the FTX debacle and lack of bullish narratives for the niche space, most investors were expecting slower growth in 2023.

There are unresolved issues such as the potential fallout from a digital currency pool, geopolitical tensions between Russia and Ukraine, and recession risks from the Fed’s aggressive quantitative tightening policies. Thus, most traders were not expecting big price increases so early in the year.

Ultimately, negative sentiment and overcrowded positions in the futures market continued to fuel the upside. There is a strong chance of a pullback soon after big gains. It remains to be seen whether the pullback levels are attractive enough for buyers to make this a medium to long-term uptrend. Let’s take a look at the top performing cryptocurrencies for January.

Top Crypto Market Gainers in January. Source: CoinMarketCapAptos (APT)

Launched in October 2022, Aptos is a relatively new blockchain in the space that leverages technology from Facebook’s discontinued project (Meta), Libra. It carries significant face value based on its management team, made up of former Meta engineers, who also built the Move programming language to make the chain scalable and decentralized.

While the project carries a lot of reputation, its fundamentals do not justify the price. Investor disbelief is part of the reason for APT’s price hike. A market capitalization of $3 billion for a four-month-old project surprised many onlookers. There is also a suspicion of market manipulation in the APT/KRW pair on Upbit, giving rise to the Kimchi premium. It is difficult to identify a specific factor behind its demand in South Korea.

APT/USD surpassed its previous peak of around $10, recorded around its launch. Technically, the token is currently in price discovery mode. Thus, there are few sell-side resistance levels apart from the last high of $20 and the psychological level at $25. Unless the positive catalysts of the negative perpetual swap funding rate and the Kimchi premium subside, the recovery may still have wings.

The price momentum indicator, the Relative Strength Index (RSI), has climbed into oversold territory, suggesting the possibility of a pullback. The Moving Average Convergence Divergence (MACD) indicator shows a slight bullish deviation with a lesser rise in the metric against the price. Still, the presence of buying volume is reassuring for APT bulls. Support for the token lies at $14.75 and $10.40.

APT/USD daily price chart with RSI and MACD indicator. Source: TradingViewGala (GALA)

Like Aptos, Gala (GALA) also benefited from excessive negative positioning in the futures market. GALA/USD’s gain from $0.02 to $0.07 can mainly be attributed to the erasure of short positions.

GALA price (yellow) and funding rate. Source: Coinglass

The token has experienced significant inflation of approximately 17,123,286 GALA per day, which is approximately $28.2 million per month at current prices. This has raised fears that the recent price pump may be short-lived.

On January 25, the Galas team presented a new roadmap for the project in which they seek to update tokenomics to reduce inflation and introduce a new burning mechanism. They are working on an independent Gala channel, where GALA tokens will be used to pay transaction fees.

On top of that, GALA’s daily show may also cut after passing a vote to change the time-based halving schedule to a supply-based schedule to bring the July halving closer. 203.

The upgrade announcements have added to the buying pressure on GALA/USD resulting in a surge in buying volume. The token is trading above its 200-day exponential moving average at $0.052. If the buyers build support above this level, the price may reach the July 2022 breakdown levels near $0.164.

GALA/USD daily price chart. Source: TradingViewThreshold (T)

Threshold was born from the merger of two projects, Keep Network and NuCypher, which combined their technologies to build a decentralized bridge network. Node operators on the Threshold network stake the platform’s native token, T and Ether, to validate transfers between Bitcoin and Ethereum. This technology was borrowed from Keep Network, while NuCypher adds a privacy layer to the protocol.

In January, the price of the project’s native token nearly tripled, benefiting from the launch of V2 and listing announcements from Coinbase. The upgraded version of the Threshold Protocol will enable tBTC (Bitcoin Threshold) coins on Ethereum, which are backed by Bitcoin and pegged 1:1 to the BTC price.

The start of tBTC mints on Ethereum through Threshold Network will likely increase the network’s total value locked, aka TVL, making Threshold nodes more valuable. Initially, the project will launch a semi-decentralized version, Optimistic Minting, and will gradually move to a decentralized system of nodes.

There is a significant market opportunity for Threshold following the dissolution of RenBTC. Wrapped Bitcoin (WBTC) currently holds a dominant 93.6% share of total Ethereum-linked Bitcoin.

Still, the recent 190% surge is starting to show signs of a buy the rumour, sell the news type event, especially considering the Coinbase-led upside. Support for the buyers lies at $0.027, with the next level of resistance at $0.145.

Decentralized (MANA)

Metaverse-themed projects Decentraland (MANA) and The Sandbox (SAND) have witnessed a revival of VR storytelling as Apple will launch its collection of VR headsets in the spring of 2023. More recently, the Decentralands team released its manifesto for the current year, emphasizing the growth of its community of developers and creators.

While Decentraland is one of the first metaverse projects with a huge opportunity to capture the future Web3 market, the current rally is showing short-term overbought characteristics.

The RSI indicator shows a reading above its bullish resistance. The MACD indicator is showing divergence with little to no change in the metric to complete the January 28th 16.5% surge.

MANA/USD daily price chart. Source: Trading View

Nonetheless, the break above the 200-day moving average and the resistance of the FTX breakout levels at 0.70 are encouraging for technical buyers. It remains to be seen whether the push was a hunt for short-term orders or stemmed from actual demand. Support for the token lies at the 50-day EMA, current at $0.54, and 2022 lows at $0.27.

Solana (SUN)

Solana (SOL) benefited from excessive negative sentiment around the future of blockchains. The price rally was a classic case of a short squeeze in the futures market. As the fundamentals pointed to a death spiral in its price, the market played the best seller. By taking advantage of low liquidity conditions, buyers were able to drive prices up until there were few sellers left.

Market maker and venture capital entity, Alameda Research, was the primary source of liquidity for Solanas DeFi projects. It has also been one of the largest funders of its ecosystem projects. The DeFi community will face significant challenges within Solana due to a lack of liquidity.

Solana developers and the foundation have worked hard to make the network stable and more decentralized. While the network remained stable during the FTX debacle, it appears to have lost market confidence due to frequent outages. Additionally, Alameda/FTX holds approximately 10.7% of the total SOL supply, which will likely increase selling pressure over the next few years.

Their NFT space, while ranked second in terms of blockchain transaction volume, is starting to see the departure of top performers like DeGods, y00ts, and more recently, F Studio. It remains to be seen if the community can rebuild itself. The task will be difficult without the support of its most prolific donors.

Over long periods of time, the $30 level is a crucial resistance and support level for SOL/USD. If the buyers consolidate above this level, the positive momentum in the price of the tokens will likely extend into the first quarter of 2023. However, given that the rally is mainly driven by a short-side wipeout in the market Eventually, there is a greater likelihood of a significant correction, followed by a period of accumulation, until a meaningful run can take shape.

Last but not least, the LSD Narrative Tokens deserve a mention in the monthly winners list. Native tokens on Ethereum LSD platforms have almost doubled in price across the board thanks to the upcoming Shanghai upgrade.

The Frax DAO was the highest gainer among LSD tokens, benefiting from a strong rise in Ether staked on its platform. The platform is able to attract liquidity by providing additional yield on ETH staking by leveraging its position in Curve Finance.

The Frax DAO is the largest owner of CVX tokens, giving them priority control over Curve shows. Currently, frxETH staking on Curve generates an annual return of around 9-10%, twice the average LSD return of around 4%.

Given that the Ethereums Shanghai upgrade is still a month away and there is room for growth in LSD platforms, the focus on LSD tokens could likely continue well into February.

The views, thoughts and opinions expressed herein are the sole authors and do not necessarily reflect or represent the views and opinions of Cointelegraph.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

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