Coins from bankrupt crypto firms top market gains
The cryptocurrency market is experiencing one of its worst sell-offs, driven in part by macroeconomic factors and the collapse of various digital asset projects.
In this case, the collapse of such projects was expected to drive the value of the respective tokens to near zero. However, this is not the case considering that the coins in question are rallying to defy the current market trend.
For example, CEL, the initial token of now-bankrupt crypto-lending platform Celsius, has risen 29.29% over the past seven days and was trading at $1.52 at press time. Elsewhere, the Terra ecosystem stablecoin TerraClassicUSD (USTC) has gained 27.03% over the same period and is trading at $0.035 as it tries to regain the $1 peg.
At the same time, the Terra (LUNA) ecosystem’s native chain, which operates under the Terra Classic (LUNC), has recorded significant gains and is currently up 90.04%, ranking at the top of the collapsed coins over the past seven days. The rally has come in the wake of increasing buying pressure with a Finbold report indicating that as of September 1, LUNC recorded an inflow of over $1 billion in a month.
The three digital assets lead the top 100 cryptocurrencies based on seven-day gains on CoinMarketCap as of September 2.
Drivers of rally in collapsed tokens
Based on the token’s rally, it can be assumed that respective community members still have hope that they are likely to regain their lost status in the crypto market. A notable example is the CEL Rally, where users have come together in an effort to help Celsius emerge from bankruptcy.
The belief in regaining the lost status has potentially come from the continued support of the collapsed tokens from entities such as crypto exchanges that control huge trading volumes.
The communities have also adopted various tactics to achieve this goal, such as launching social media-inspired short squeeze campaigns. On August 9, Finbold reported that CEL retook the $2 level after registering significant buying pressure following a coordinated Twitter activity under the #CELShortSqueeze banner.
In this line, there is also a notion that the short squeezes would push the tokens to take the race of meme cryptocurrencies that increased significantly in a short period of time despite minimal utility.
Increased network activity
Furthermore, despite the collapse, some of the featured crypto projects are still registering increased blockchain activity in an attempt to regain their utility. For example, there is a new proposal for a 1.2% tax on Terra.
The proposal indicates that the taxes will be levied and burned for on-chain activities, including transferring money between wallets and interacting with smart contracts.
Likewise, a new update aims to introduce a staking mechanism to the existing Terra Classic network.
Disclaimer: The content of this page should not be considered investment advice. Investment is speculative. When you invest, your capital is at risk.
