5 reasons the Aptos (APT) rally could still have wings

January 31, 2023

The Aptos token (APT) reached a new all-time high of $20.39 after posting gains exceeding 400% since the start of 2023. While the rally could just be a pump-and-dump event due to the perception of weak fundamentals, increasing negative sentiment toward the token will likely fuel a price increase in the short term.

5 reasons why APT could move even higher

1. A rich history with strong investor backing

Aptos is a byproduct of Facebook's attempt with the Libra blockchain, which regulators forcibly shut down. Two of Libra's leadership team members, Mo Shaikh and Avery Ching, later founded Aptos, a decentralized version of the abandoned blockchain project.

Aptos Labs raised $350 million in 2022, which included a $200 million seed round led by Andreessen Horowitz and a $150 million Series A funding round led by FTX Ventures and Jump Crypto. Later, Binance made a follow-on strategic investment to help boost the Aptos ecosystem.

The Aptos hype could be stemming from its ability to compete against layer 1 blockchains like Solana and Cardano.

2. Steady ecosystem development

The Aptos blockchain was launched October 2022 and is still in the nascent stages of ecosystem development. There are a few decentralized finance and nonfungible token projects on the blockchain, and smart contract activity is currently limited.

Aptos is not the first project to build a hefty market capitalization without significant on-chain activity. Cardano and Polkadot are prominent examples, where the rise in their native token's price is primarily led by the "superior technology" narrative.

Aptos' social following and platform usage lag behind industry leaders, but the price of its APT token has been unbound by these fundamental constraints.

3. Traders' disbelief

Given the lack of activity and limited ecosystem growth, the rally of APT has taken the market by surprise. It is not difficult to find tweets hinting at the overblown market capitalization of the token.

Contrary to popular belief, this negative sentiment can actually be a bullish signal. If upside momentum persists, shorts will consistently have their stops triggered leading to more upside movement.

The adage "the market can stay irrational longer than traders can stay solvent" is on full display here.

4. Limited sell pressure

APT's tokenomics has limited the selling pressure on the token for the first year since its launch in October 2022. The release schedule of APT delays investor unlocks until October 2023, after which there will be a steep rise in the circulating supply of APT.

Until the unlock begins, the only source of inflation is from staking rewards, which is 7% for staked tokens.

5. Premium purchases

Significant buying interest for APT is coming from the South Korean won trading pair on the Upbit crypto exchange. The exchange constitutes nearly 40% of the APT trading volume. The price of APT on Upbit is trading around 1% – 3% higher than the market price, which indicates high demand in the region.

There's a chance that the volume on Upbit is inflated from wash trading, or it could be an attempt to manipulate the markets. The exchange's owners have come under the purview of regulators many times in the past. Nevertheless, the buying pressure will likely persist until the kimchi premium resolves.

Enjoyed this analysis?

Get the full story by reading the complete article on Cointelegraph.

Don't miss a beat in the world of crypto. Leverage the same AI technology that Cointelegraph's journalists use to surface the latest news with the NewsQuakes™ indicator that's only available on Cointelegraph Markets Pro — click here to learn more.