Sometimes to build something up, you need to tear it apart first, and the cryptocurrency market seems to be no exception.
Most digital coins have trailed Bitcoin since early January, but there’s one outlier, according to Fundstrat Global Advisors: tokens that are set to split in two, or fork, and cryptos planning airdrops, or free token distributions. This group has outperformed the top cryptocurrency by 5 percent since the start of the year, when alt-coin prices peaked.
This might sound counterintuitive, but history may corroborate the connection, Fundstrat said in a report Thursday. Bitcoin’s forks in August and October added around 15 percent to its value, while Litecoin’s split on Feb. 18 boosted its return by nearly a third.
“This could be a function of the ‘network effect’ spreading to related protocols — or it could be simply a function of buyer ‘greed,”’ Thomas Lee, Fundstrat’s head of research, said in the report.
Lee identified three major forks over the next three months — ZClassic, Monero and Bitcoin — and three major airdrops — Ethereum Classic, Neo and EOS.
As for the recent sell off in alt-coins, or digital currencies other than Bitcoin, Fundstrat said the pain could last until late March.
“The alt-coin selloff is more than halfway done and is shaping up for strong rally in late summer 2018,” Lee wrote.