What happened
For what started out as a bearish year for crypto, bearish sentiment has only continued to increase. The yearly declines for various high-momentum cryptocurrencies such as Shiba Inu (SHIB -1.15%), Convex Finance (CVX -1.34%), and Maker (MKR -2.31%) are noteworthy. In many respects, investors have reason to avoid these tokens in this environment of de-risking.
That said, these three popular crypto projects are seeing renewed buying interest today. As of 9:30am ET, these three tokens have appreciated 6.1%, 7%, and 10.6%, respectively, over the past 24 hours.
Image source: Getty Images.
So what
Over the past week, dip buyers have seemingly gone into hiding. For more speculative meme tokens like Shiba Inu and stablecoin-related tokens Maker and Convex Finance, buyers are (finally) stepping up to average down on these digital tokens today.
The incredible price action we've seen with Terra (LUNC 0.31%) and TerraUSD (USTC -1.44%) over the past 24 hours may be responsible for increased interest in Maker and Convex Finance. Maker is the governance token supporting the MakerDAO and Maker Protocol, which exists to support the DAI stablecoin. Convex Finance is a liquidity provider allowing users to earn a share of trading fees on Curve, which operates a key stablecoin exchange. As UST's troubles continue, investors may be looking for other stablecoin-related projects to invest in as a bet on increased market share.
Shiba Inu's recent launch of a token-burning mechanism has spurred some interest from speculators in this digital asset. While token-burning volume is down over the past 24 hours, according to website Shibburn, around 150 million SHIB tokens continue to be burned every 24 hours. Less supply should support higher prices. At least, that's what Shiba Inu hopefuls are betting on right now.
Now what
Shiba Inu, Convex Finance, and Maker are three projects I'm skeptical about right now. While I can understand the bullish theses driving these tokens higher in the near term, it's hard to make a fundamental case for these projects succeeding in the long term relative to their competition. It's a highly competitive market out there, and these projects don't operate in a vacuum.
That said, with the stock market rebounding today, it appears risk-on sentiment is carrying these tokens higher. As a leveraged way to play volatility, perhaps there's an argument that can be made for buying these tokens. However, I'm happy to watch the price action from the sidelines right now.
