This under-the-radar crypto has risen 112% in the past month. Here’s why the rally may have legs
This article was originally published on Fool.com. All figures are in US dollars unless otherwise stated.
Halloween is almost here and there’s a crypto that looks like it’s back from the dead. It is The Huobi Token (CRYPTO: HT) which is up 112% in the last month. This increase is particularly impressive during a challenging period for the broader crypto market.
What is Huobi Token, what is behind this rally and why does it look like the rally may have legs?
What is Huobi Token?
Huobi Token is the native token of Huobi Global, currently the world’s 13th largest crypto exchange by volume, according to data from CoinGecko. Huobi Token is the 39th largest crypto by market capitalization, with a value of $1.4 billion. As an exchange token, holding Huobi Token provides benefits to Huobi users, such as lower transaction fees on the exchange.
The Huobi exchange’s popularity once rivaled the likes of Binance and Coinbase Global, but China’s crackdown on crypto trading was a blow to Huobi Global, which had a large presence in China. Huobi Token reached a price of almost $40 in May 2021, but by June 2022 it had fallen to $4.22 due to the ban in China as well as the broader crypto market selloff. Huobi Global and Huobi Token needed a catalyst, and help was on the way.
About face
Huobi Token has staged a furious rally over the past month and is aiming for further gains. The rebound was spurred by news that a new investor, Hong Kong-based asset manager About Capital, had bought the company from controlling shareholder Leon Li.
About Capital is led by Ted Chen, who previously started Greenwoods Asset Management, one of China’s top hedge funds. About Capital promised to invest new capital in the stock exchange and to work on international expansion.
Chen is bullish on Huobi Global and the cryptocurrency industry as a whole, saying:
Huobi Global offers the best in virtual investment services to millions of international users. We believe that the virtual asset industry is still in its early stages and that there is tremendous upside for long-term growth.
This was a boon for the exchange and the token, but there was more good news to come. Huobi said that as part of its international expansion efforts, it would create a “global strategic advisory board led by leading industry figures,” and it delivered on those efforts.
The sun also rises
One of these industry leaders that Huobi managed to recruit to its advisory board is Throne (CRYPTO: TRX) founder Justin Sun. Sun is one of the most high-profile investors in the crypto scene and is also reportedly one of Huobi Token’s largest holders.
Seventy-four million Huobi tokens were reportedly transferred from Huobi wallets to two wallets linked to Sun and his Poloniex exchange, so Sun is clearly motivated to see Huobi Global and Huboi Token succeed. Sun has talked about the importance of Huobi Token as a core part of Huobi Global’s value proposition and growth plans, comparing it to the integral role of Binance coin has played in Binance’s success.
Sun’s presence has brought significantly more attention to the Huobi Token, and his extensive on-the-ground experience promoting cryptocurrency in places like South America and the Caribbean lends credibility to Huobi’s international expansion plans. Sun also hopes that Huobi Global will one day re-enter the Chinese market, if and when regulations permit.
Interestingly, Sun also announced plans to merge the Huobi ECO chain with Tron and BitTorrent (CRYPTO: BTT) ecosystems and promised to invest in building all three ecosystems, although it is not yet clear what this will actually entail.
Here’s why everything bodes well for Huobi Token and its investors. If About Capital and Sun are able to execute their growth plans, Huobi Global will gain new users, which will drive more trading volume on the exchange. This will generate higher revenue for the exchange and Huobi Global is committed to using 20% of exchange revenue to buy back or “burn” Huobi tokens every quarter, the same way Binance burns Binance coins. Burning these tokens reduces the supply and theoretically makes the remaining tokens more valuable to current holders, similar to a company buying back shares of its stock.
Ultimately, it’s important to remember that investing in cryptocurrency further down the list in terms of market cap can be a risky venture. There is no guarantee that Huobi Global’s plans will succeed, and there is a lot of competition in the crypto exchange market. However, for risk-tolerant investors, Huobi Token has a lot of potential.
Huobi still has some name recognition and brand value from its heyday, and this, combined with the deep pockets and big ambitions of its new backers, makes it an exciting asset with a lot of upside. If they can build out Huobi Global, it will eventually increase the value of Huobi Token, as increased revenue from more transactions will lead to burning more Huobi Tokens.
This article was originally published on Fool.com. All figures are in US dollars unless otherwise stated.
