Monday, 15 April 2024

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

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

Aptos (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 the prices in the short term.

Let’s explore some of the factors that could be propelling the Aptos price rally.

A rich history and 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 found Aptos, a decentralized version of the abandoned blockchain project.

The Move programming language-based project introduces a new class of Layer-1 blockchains that will compete against the likes of Solana and Cardano. Investors’ hope for a technological breakthrough, Aptos that could finally provide a scalable, secure, and decentralized blockchain are primarily responsible for creating tailwinds for the token.

Aptos raised $350 million in 2022, which includes 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 fact that FTX ventures are prominent investors induces the risk of a sell-off from the defunct entity. In this regard, some investors might be reassured by the involvement of other venture capitalists like Multicoin Capital, Blocktower Capital, and Coinbase Ventures. High volume exchanges like Binance could also soften the blow dealt by FTX/Alameda.

Steady ecosystem development

The Aptos blockchain was launched in October 2022 and is still in the nascent stages for ecosystem development. There are not many DeFi and NFT projects on the blockchain and the smart contract activity is currently limited. More than 94% of the blockchain transactions are for APT transfers, showing negligible dApp activity.

Aptos transaction volume by purpose of transactions. Source: Pinehearst

The development activity has been around average on the blockchain. The number of active developers on Aptos are more than Avalanche and Tezos, but behind Solana, Polkadot, Cardano and Ethereum.

Number of active developers working on blockchains and dApps. Source: token terminal

Aptos is not the first token to build a hefty market capitalization without significant on-chain activity. Cardano and Polkadot are prominent…

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