While it may have escaped the attention of many, Bitcoin is not the only cryptocurrency rallying right now. While Bitcoin’s price stood at $18,600 at press time, the combined market capitalization of all cryptocurrencies was north of $548 billion. In fact, Bitcoin’s dominance was down from 66% to 63.2%.
In fact, some altcoins like XRP, Ethereum, and Litecoin have rallied over the past few days too, alongside Bitcoin, sometimes even irrespective of the king coin’s price action, especially when BTC was below $14,000.
Interestingly, even so-called “Zombie chains” with low momentum and volatility have rebounded well from the crypto-winter, with many of these projects rewarding HODLers with double-digit gains. This is true of many DeFi projects, especially those that have recovered from hacks and serious loss of trader interest and popularity in the past.
While not centered around these DeFi projects, @EvanVanNess, in a recent tweet, highlighted the fact that “zombie chains” like EOS, XTZ, and XRP have also shown potential lately with high weekly gains.
Source: Twitter
Before we move forward, here’s a disclaimer though – Let us not assess whether Van Ness is right about which projects are Zombie chains and which are not. For argument’s sake, let us take his word. Or rather, let us take the word of the research paper Van Ness cited, one which claimed that 95% of EOS transactions are from airdrops of a valueless token, 82% of Tezos throughput is used for baking, and 98% of XRP transactions have 0 value.
Now, his observations are interesting because a rally in “Zombie chains” underlines the hype around nearly every project in the ecosystem today, with each of them responsible for pushing the cumulative market cap towards $550 billion.
Tezos [XTZ], for instance, has been criticized for the longest time. Though it started off as an “ETH killer,” many claim that it has several zero value transactions. Back in October 2020, Tezos was over 65% down, compared to ETH. At the time of writing, however, XTZ was up by 21% on the 24-hour charts. Not only are these numbers projecting a recovery, but they are projecting double-digit rewards.
XRP, another zombie chain according to Ness, has left retail traders wanting more with respect to its recovery. During Bitcoin’s price rally in 2017, XRP’s price hit $3.10, before it eventually dropped to $0.4 by April 2018. With Bitcoin making its way to $19,000, XRP’s value hit the $0.45-level. This may be partly attributed to XRP’s correlation with BTC, with the same standing at 0.74, at press time.
It should be noted here that correlation isn’t an argument that can be made for Tezos and EOS. However, this is not the case for XTZ and EOS. In fact, here are the correlation stats,
Correlation of XRP, XTZ, and EOS with Bitcoin || Source: CoinMetrics
EOS and XTZ are not as correlated as XRP and hence, their price rally cannot be explained by BTC’s price rally. What does this mean?
Well, the rallies of these so-called “zombie chains,” alongside Bitcoin’s own rally, shows the irrational side of the market, maybe hopeful in the least? Despite a low correlation, demand for XTZ and EOS is one of the driving factors behind their current daily returns.
Back in 2017, post the historic bull run and during the accompanying drop, Bitcoin’s exit pump was accompanied by an altcoin rally. A similar expectation on the part of retail traders may be the driving force behind this price rally.