LEO: Why investors need to be wary of hype behind Bitfinex’s token

Bitfinex’s LEO token has grow to be the speak of the city, fairly actually. Particularly ever because it turned the most recent entrant into the highest 20 cryptocurrencies record. Nevertheless, fairly frankly, it didn’t attain right here by its personal advantage. It simply managed to by some means retain its worth whereas the remainder of the market round it has been going haywire all via the month of Could.

Behind the hype

Worth action-wise, LEO may be precisely described as extraordinarily boring. Taking a look at numbers, in per week when Bitcoin and Ethereum corrected by 1.5% and 10% respectively, LEO gained an odd %.

LEOUSDT 2022 05 28 16 04 33

LEO/USDT | Supply: Tradingview

Even when we had been to take a look at its use circumstances – it hardly quantities to a lot. LEO token is the native coin of the Bitfinex cryptocurrency alternate. It’s used as a “quote” forex to commerce towards a number of cryptocurrencies. Bitfinex additionally provides reductions and rewards for trades utilizing the LEO token.

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The explanation behind LEO’s rise via the ranks of high cryptos can not actually be credited to the coin or its ecosystem totally. Why? Properly, whereas all of the cash round it had been crushed up black and blue, this coin managed to retain its worth – thus routinely rising up the ranks. That in and of itself is an achievement – it doesn’t essentially level to a really brilliant future for the coin.

And, fairly probably, this might be a one-off incident too. if we had been to check out just a few different alternate tokens like WRX, FTX, and the likes – we will see these cash should not essentially impervious to cost falls. The massacre via the month of Could has been tough on all these cash too.

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Not all unhealthy information

Nevertheless, not all the things seems to be unhealthy for the coin. In line with knowledge from Glassnode, lively addresses utilizing the coin have been on a gradual rise prior to now couple of days – particularly because the starting of Could. Albeit, this can be due to the truth that it has caught the eye of plenty of merchants.

glassnode studio unus sed leo number of active addresses 14d moving average

Energetic Addresses | Supply: Glassnode

The NVT ratio for this specific coin can also be fairly low. This, due to this fact, factors to the truth that the coin is at a lovely valuation with regards to transacted worth on the blockchain. Fairly much like the PE ratio in conventional fairness markets, Community Worth to Transactions Ratio (NVT Ratio) is outlined because the ratio of market capitalization to the transacted quantity in a selected time interval.

glassnode studio unus sed leo network value to transactions ratio nvt 14d moving average

NVT Ratio | Supply: Glassnode

Together with the above-mentioned factors, contemplating the way it was merely ignored within the October 2021 market-wide rally, going ahead this coin may be anticipated to not carry out too properly both.

Nevertheless, as a counter, it might act as a hedge towards future crashes prefer it did this time. From the start of Could, LEO corrected hardly 16% whereas Bitcoin has touched a low of over 30% in the identical timeframe. This wants to face the check of time- one other crypto crash and different future developments within the coin.

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