What happened
Today is the first official trading day for stocks, but the third official trading day for cryptocurrencies in 2022. Most top tokens have seen heightened volatility to start the year, as investors place their bets on which tokens could outperform this year.
Most mega-cap cryptocurrency tokens are down today, with Ethereum (CRYPTO:ETH) trading 2.3% lower over the past 24 hours, as of 12:30 p.m. ET.
Out of the top 20 cryptocurrencies, Chainlink (CRYPTO:LINK) is one of only four tokens that have made a positive move over this same time frame. This token appreciated 3.5% over the past 24 hours.
Investors in smaller-cap tokens such as Cosmos (CRYPTO:ATOM) are having more luck today. Cosmos has zoomed 10.1% higher over the past 24 hours in early afternoon trading.
Image source: Getty Images.
So what
To start the year, it appears investors are intent on seeking out higher-growth, small-cap tokens rather than settling for the slow-and-steady growth profile of larger networks such as Ethereum. The end of December marked a period that could be best characterized as a defensive rotation into larger-cap tokens to end the year. However, it appears risk-on sentiment is back to start the year, with tech stocks leading the way in equities markets today.
Interestingly, Chainlink and Cosmos share some similarities investors appear to have homed in on today. Chainlink is a leading oracle network, allowing off-chain data to be integrated with blockchain networks. Cosmos is a network that aims to allow for data between separate blockchains to be bridged. Both crypto platforms are integral pieces to the interoperability of the blockchain world — where many investors believe the crypto space is headed.
Forward-looking investors appear to be picking up on the potential of Chainlink and Cosmos today, looking past the more defensive large-cap tokens in search of growth.
Now what
It’s still very early in the year to make any sort of predictions as to which tokens are likely to outperform in 2022. However, early indications are that investors are seeking out specific tokens with the ability to allow for increased use cases among multiple blockchains, and those allowing for integration with real-world data sources. This is a trend I’ve had my eye on, and is one I remain bullish on moving forward. Chainlink and Cosmos are two tokens high on my watch list right now.
That said, Ethereum’s ecosystem is massive, both in terms of size and importance to the burgeoning application side of the crypto world. Investors would do well to consider each of these tokens as part of a well-diversified crypto portfolio. However, today, fortune favors the risk-takers looking for near-term growth catalysts in the crypto market.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.
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