Crypto Market January Roundup: Aptos, Metaverse-Affiliated Tokens Lead Broad-Based Rally

After spending 2022 in the doldrums, the cryptocurrency market has soared in January, with the biggest winners tokens that fell by the most last year.

Layer 1 blockchain Aptos’ APT token was the biggest winner among 160 assets in the CoinDesk Market Index, a measure of overall market performance, surging 387% this month. Gaming- and metaverse-affiliated tokens including Gala Games’ GALA token and Decentraland’s MANA token gained 233% and 149%, respectively.

“It’s not unusual to see the hardest-hit coins rallying the most when the market turns bullish,” Martin Leinweber, digital assets product specialist at MarketVector Indexes, said. “Those smaller altcoins have a higher beta to bitcoin on the way up and on the way down.”

The increases come during a broad-based swoop upward in digital assets that has seen bitcoin and ether, the two largest cryptocurrencies by market capitalization, rise about 40% and more than 30%, respectively. The CoinDesk Market Index has climbed 38%.

Aptos’ APT token was the biggest winner in January among 160 assets in the CoinDesk Market Index. (CoinDesk Indices)

Aptos’ rise

Founded by ex-Meta Platforms employees and launched in October, Aptos had a rocky start amid widespread questions about the network's transaction speeds and tokenomics. The November market tsunami triggered by crypto exchange FTX’s collapse sent APT’s price to an all-time low at $3 on Dec. 29, down more than 76% from its initial $13 listing, according to CoinDesk data. FTX’s investment arm and venture capital titan A16z were among Aptos’ investors.

Traders heavily shorted APT at the start of the year, showing a willingness “to pay triple digits in annualized interest to do so,” Leinweber told Coindesk, referring to the sharp drop in APT’s annualized funding rate on Jan. 25.

Leinweber said while there’s no pressure on the price from selling because Aptos investor unlocks are not set to begin until this coming October, the extreme negative positioning in Aptos led to a massive short-squeeze, which eventually and quickly pushed the price higher in a month.

Coinglass data shows $115 million in liquidated short positions compared to approximately $70 million long liquidations since Jan. 8. The trend may underscore concerns that many traders have about Aptos.

“For the token to justify its market value, it will need to grow its user base and liquidity significantly before the VC unlocks kick in,” Leinweber added.

Metaverse tokens surge

Increases in media, culture and entertainment tokens outpaced all other sectors as the CoinDesk Culture & Entertainment Index skyrocketed 81%. Among the biggest gainers were metaverse-related tokens MANA (Decentraland) and SAND (The Sandbox), which recently rose 152% and 91%, respectively. Play-to-earn game Axie Infinity’s AXS token has jumped around 75%.

A Monday report by crypto data firm Kaiko noted a surge in metaverse token trading volumes on South Korea’s largest crypto exchange, Upbit, compared to Binance, the world’s largest exchange by trading volume.

“The trend suggests that the Korean region has a particular affinity for the metaverse,” according to the report, noting that daily volumes had crossed $600 million for the four tokens Jan. 22-23, nearly double the volumes on Binance for the two days.

Crypto markets, which have largely correlated with equities' performance over the past month, particularly the technology sector, have significantly outperformed major indexes. The tech-heavy Nasdaq and S&P 500 have risen 9% and 5%, respectively, regaining ground from their own 2022 spiral down.

Bitcoin, ether, S&P 500, Nasdaq, CoinDesk Market Index returns in January (CoinDesk)

Other crypto winners have included the LCX cryptocurrency exchange’s LCX token and's native FET token, which recently rose 292% and 201%, respectively. Solana’s SOL token surged 146% in January to recently trade around $24, rebounding from its December record low of $8.19. A favorable, late December tweet by Ethereum co-founder Vitalik Buterin, who expressed “hope” that the Solana community “gets its fair chance to thrive,” has helped spark SOL’s rally.

January’s Losers

Chain’s XCN token in the CMI's Currency sector was one of two monthly laggards, falling 10%. MXC, the native token of the MXC Supernode network in the Computing sector, declined by roughly 5%.