Altcoins that made double-digit gains as the price of bitcoin soared

The rally in the cryptocurrency markets began in early January with a surge in heavily shorted altcoins andEthereum (ETH) liquid staking derivative(LSD) due to the upcoming network upgrade in March. Prices soon began to rise across the board as buyers began to play catch-up. Improved macroeconomic conditions, such as lower inflation and a strong US employment sector, provided additional tailwind for the positive rally.

Bitcoin (BTC) is on its way to beingimpressive January closure since 2013. Since the beginning of the year, its price has increased by 40% compared to the initial value of $16,530. Another important catalyst for the rally in January 2023 was the compression of short positions in the cryptocurrency market.

After the FTX fiasco and absence“bullish” narratives for the niche space, most investors expected growth to slow in 2023. Issues remaining unresolved include the possible collapse of the Digital Currency Group, geopolitical tensions between Russia and Ukraine, and the risks of recession due to the Fed's aggressive quantitative tightening policies. Therefore, most traders did not expect strong price rallies at the beginning of the year. As it turned out, negative sentiment and overcrowded positions in the futures market contributed to further price increases. There is a strong possibility of a pullback soon after the sharp rise. It remains to be seen whether the pullback levels will be attractive enough for buyers to turn it into a medium- to long-term bullish trend. Let's take a look at the most successful cryptocurrencies in January.

Launched October 2022,Aptosis a relatively new blockchain system,using technology from the canceled Facebook project (Meta) – Libra. It has a significant notional value thanks to its executive team of former Meta engineers who also created the Move programming language to make the chain scalable and decentralized. Although the project has a great reputation, its fundamentals do not justify the price. Investor disbelief is one of the reasons for the APT price rally. The $3 billion market capitalization for the four-month-old project surprised many observers. There are also suspicions of market manipulation in the APT/KRW pair on Upbit, which led to the appearance of the Kimchi premium.

It is difficult to identify a specific factor that determinesdemand for this product in South Korea. APT/USD broke above its previous high near $10 near its launch. From a technical point of view, the token is currently in price discovery mode. Thus, other than the last high at $20 and the psychological level at $25, there are few levels of resistance from sellers. If positive catalysts in the form of a negative funding rate for perpetual swaps and the Kimchi premium do not cool off, the rally could still take wings.

Индикатор расхождения (MACD) показывает небольшое a bullish rejection with a less steep rise in the metric compared to the price. However, the presence of buying volume is reassuring for APT bulls. Support for the token is at $14.75 and $10.40.

Like Aptos,Gala (GALA)also benefited from excess negativepositioning on the futures market. The rise in the GALA/USD rate from $0.02 to $0.07 can be primarily attributed to the destruction of short positions. The token has experienced significant inflation – about 17,123,286 GALA daily, which is about $28.2 million per month at current prices. This has raised concerns that the recent price surge may be short-lived. On January 25, the Gala team presented a new roadmap for the project, in which they aim to update tokenomics to reduce inflation and introduce a new burn mechanism. They are working on creating an independent Gala chain where GALA tokens will be used to pay transaction fees.

In addition, the daily issue of GALA can alsodecline after a vote is held to change the time-based halving schedule to a supply-based halving schedule to bring the halving closer to July 203. The update announcements increased buying pressure in the GALA/USD pair, which manifested itself in a surge in buying volume. The token is trading above its 200-day exponential moving average at $0.052. If buyers strengthen support above this level, the price could rush towards the July 2022 breakout level around $0.164.

Thresholdwas born as a result of the merger of two projects, KeepNetwork and NuCypher, who combined their technologies to create a decentralized bridge network. Node operators on the Threshold network use the platform's native token, T and Ether, to confirm transfers between Bitcoin and Ethereum. This technology was borrowed from the Keep Network, and NuCypher adds a layer of privacy to the protocol. The project's native token nearly tripled in value in January, benefiting from the launch of V2 and Coinbase's listing announcement. The updated version of the Threshold protocol will allow mining tBTC (threshold Bitcoin) on Ethereum, which is backed by Bitcoin and pegged 1:1 to the price of BTC.

Beginning of tBTC mining in Ethereum via ThresholdNetwork will likely increase the network's total locked value, or TVL, making Threshold nodes more valuable. The project will initially launch a semi-decentralized version, Optimistic Minting, and will gradually transition to a decentralized node system. Following the collapse of RenBTC, Threshold has significant market opportunity. Wrapped Bitcoin (WBTC) currently holds a dominant share of 93.6% of the total number of Bitcoins transferred to Ethereum. However, the recent 190% rally is starting to show signs of a "buy the rumor, sell the news" event, especially given the Coinbase-led rally. Support for buyers is at $0.027, and the next resistance level is – by $0.145.

ProjectsDecentraland (MANA) and The Sandbox (SAND), dedicated to the metaverse, witnessedreviving the VR narrative as Apple is rumored to launch its collection of VR headsets in Spring 2023. Just recently, the Decentraland team released their manifesto for the year, which focuses on growing the developer and creator community. Although Decentraland is one of the earliest metaverse projects with a huge opportunity to capture the future Web3 market, the current rally shows overbought in the short term. The RSI indicator shows readings above its “bullish” resistance.

MACD indicator shows divergence fromlittle or no change in the metric, complementing the 16.5% spike on Jan 28. However, a break above the 200-day MA and resistance from the FTX breakout at 0.70 is encouraging for technical buyers. It is not yet clear if this surge was simply a stop in the hunt for short orders or if it was caused by real demand. Support for the token is at the 50-day EMA, current $0.54, and 2022 lows at $0.27.

Solana (S.O.L.)benefited from overly negative sentimentaround the future of blockchain. The price rally was a classic case of a short squeeze in the futures market. Although fundamentals pointed to a death spiral in prices, the market played in favor of sellers. Taking advantage of low liquidity conditions, buyers were able to push prices higher until there were few sellers left. Market maker and venture capital firm Alameda Research was the primary source of liquidity for Solana's DeFi projects. It has also been one of the largest funders of ecosystem projects. The DeFi community will face significant challenges under Solana due to the lack of liquidity.

The Solana developers and the foundation have made every effort toto make the network stable and more decentralized. While the network remained stable during the FTX debacle, it appears to have lost market confidence thanks to frequent outages. Moreover, Alameda/FTX owns approximately 10.7% of SOL's total supply, which is likely to increase pressure on the market over the next few years. Their NFT space, although the second largest trading volume on the blockchain, is starting to see the departure of top players such as DeGods, y00ts and most recently F Studio.

It is not yet clear if the community will be able to recover.The task will be difficult without the support of the most active supporters. On long timeframes, the $30 level is the most important resistance and support level for SOL/USD. If buyers consolidate above this level, the positive momentum in the token price is likely to stretch into Q1 2023. However, given that the rally is mainly driven by a reduction in short positions in the futures market, there is a strong possibility of a significant correction followed by an accumulation period until a meaningful run is formed.

And last but not least:LSD-narrative tokens deserve a mention in the monthly list of winners. The native tokens of the Ethereum LSD platform have nearly doubled in value across the board thanks to the upcoming Shanghai refresh. DAO Frax received the largest increase among LSD tokens, benefiting from a strong increase in the Ethereum rate on its platform. The platform is able to attract liquidity by providing additional ETH yield by using its position on Curve Finance. Frax DAO is the largest holder of CVX tokens, which gives it priority control over the issuance of Curve.

Currently betting frxETH on Curve bringsabout 9-10% annual return, which is twice the average LSD return of about 4%. With the Shanghai Ethereum update still a month away and LSD platforms have room to grow, LSD token attention could continue into February.