XRP, Tezos, EOS – Are the so-called “zombie chains” finally working?

While it may have escaped the attention of many, Bitcoin isn’t the only cryptocurrency that is rallying right now. While Bitcoin’s price was $ 18,600 at press time, the combined market cap of all cryptocurrencies was north of $ 548 billion. In fact, Bitcoin’s dominance dropped from 66% to 63.2%.

In fact, some altcoins like XRP, Ethereum, and Litecoin have also risen in recent days, along with Bitcoin, sometimes even regardless of the price action of the real coin, especially when BTC was below $ 14,000.

Interestingly, even so-called “zombie chains” with low momentum and volatility have bounced well from the crypto-winter, with many of these projects rewarding HODLers with double-digit earnings. This is true of many DeFi projects, especially those that have recovered from hacks and severe losses of interest and popularity by traders in the past.

While not focused on these DeFi projects, @EvanVanNess, in a recent tweet, highlighted the fact that even “zombie chains” like EOS, XTZ and XRP have shown potential lately with high weekly earnings.

Source: Twitter

Before we move on, here’s a disclaimer: We don’t assess whether Van Ness is right about which projects are zombie chains and which aren’t. For the sake of argument, let’s take your word for it. Or rather, let’s take the word of the research paper cited by Van Ness, one who stated that 95% of EOS transactions come from airdrops of a worthless token, 82% of Tezos throughput is Value 0.

Now, his remarks are interesting because a rally in “zombie chains” underlines the hype around nearly every project in today’s ecosystem, with each of them responsible for pushing cumulative market cap to $ 550 billion.

Tezos [XTZ], for example, it has been criticized for a long time. Although it started out as an “ETH killer”, many claim it has several zero-value transactions. In October 2020, Tezos was down more than 65% compared to ETH. At the time of writing, however, XTZ was up 21% on the 24-hour charts. Not only are these numbers projecting a recovery, they are projecting double-digit rewards.

XRP, another zombie chain according to Ness, has left retail traders wanting more than its recovery. During Bitcoin’s price rally in 2017, XRP’s price reached $ 3.10, before dropping to $ 0.4 by April 2018. With Bitcoin making its way to $ 19,000, XRP’s value hit the $ 0.45 level. This can be partly attributed to XRP’s correlation with BTC, with the same value at 0.74, at press time.

It should be noted here that correlation is not an argument that can be done for Tezos and EOS. However, this is not the case with the XTZ and EOS. In fact, here are the correlation statistics,

Correlation of XRP, XTZ and EOS with Bitcoin || Source: CoinMetrics

EOS and XTZ are not related like XRP and, therefore, their price hike cannot be explained by the BTC price hike. What does this mean?

Well, the manifestations of these so-called “zombie chains”, together with the manifestation of Bitcoin, show the irrational side of the market, perhaps hopeful? Despite a low correlation, demand for XTZ and EOS is one of the driving factors behind their current daily returns.

In 2017, after the historic bull run and during the accompanying drop, Bitcoin’s output pump was accompanied by an altcoin rally. A similar expectation from retail traders could be the driving force behind this price hike.