Bitcoin BTC Layer 2 Protocol Stacks, Ethereum ETH Staking Derivative Tokens Price Increase

January euphoria in crypto markets turned to February concern as investors sent prices of most major digital assets down.

The retreat coincided with a cascade of worrying inflation and jobs data, starting with a tepid consumer price index (CPI) in the first half of the month and continuing with an alarming flatness in jobless claims and an even more alarming rise in consumer spending. It also came amid a flurry of regulatory actions in the United States that raised concerns that government agencies were exaggerating or misdirecting their efforts.

Bitcoin (BTC) recently traded flat from a month ago at around $23,080, though it was well down from mid-February peaks above $25,000, according to CoinDesk data. The largest cryptocurrency by market capitalization rose by around 40% in January.

Ether (ETH), the second largest crypto by market cap, also traded sideways in the month to hover just above $1,600. ETH rose more than 30% in January.

“I think the narrative of ETH withdrawals and the Shanghai update coming made a lot of people worry that they wouldn’t perform as well,” Katie Talati, head of research at crypto asset management firm Arca, told CoinDesk. “However, many people have accumulated income in fees that they have earned during this period of effort.”

Bitcoin layer 2 protocol Stacks Network’s native STX token took the top prize among 160 assets in the CoinDesk Market Index, rising 216% in February. The STX token started the month at around 27 cents and climbed as high as 95 cents on February 27 before pulling back a bit.

The STX price rise coincided with market participants’ growing interest in creating Ordinal non-fungible tokens (NFT), which are NFTs on bitcoin enabled by so-called inscriptions on the Bitcoin mainnet.

Arcas Talati said the broader idea of ​​improving the Bitcoin network’s scalability has been around since Bitcoin’s Taproot upgrade — more signatures and transactions aggregated for better privacy and scalability — in November 2021.

But she added: “More information has become available in recent weeks about people buying and trading more. A lot of people have said, ‘Well, if Ordinals does really well, this gives people a reason to use the Bitcoin network, and therefore they will need to use Stacks.’

Talati noted that there is still no marketplace or infrastructure for Bitcoin NFTs yet. “People trade these Ordinals via over-the-counter (OTC) using bid and ask spreadsheets.” she said.

Foreign exchange payment gateway Alchemy Pay (ACH) was February’s second-biggest gainer, up nearly $170%. Adventure Gold (AGLD) and TrueFi (TRU) jumped more than 50% during the month, according to CoinDesk Indices. The CoinDesk Market Index (CMI) is up 3.3% for the month.

Gaming and metaverse-related tokens, which led January’s leaderboard, were among February’s biggest laggards. GMT, the native token of the STEPN ecosystem in the culture and entertainment sector, fell 33% this month, while Gala Games’ native GALA token, which gained 233% last month, fell 28% in February.

Layer 1 network Aptos’ APT token, which rose 387% in January, fell almost 30% in February.

Vetle Lunde, senior analyst at crypto research firm Arcane Research, wrote in a weekly note that the recent ups and downs of tokens, saying that in three of the past four weeks, last week’s “top 50 coins” winner has become the next week’s worst performer .

“Altcoin cycles tend to be short-lived, but this is out of the norm and has all the hallmarks of a dull market chasing opportunities, in addition to no new capital inflows,” he wrote, adding: “Poor liquidity facilitates this erratic the pattern, and you won’t be the one holding the bag when the music stops.”