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Tokens are "decoupled from Ethereum" that signal a potential race to the downside, analysts say
The recent analyzes show that the ERC-20 tokens emitted on the Ethereum blockchain are now apparently decoupled, which means their price no longer reflects that of ether. Instead, tokens are creating their own platforms and communities.
According to Santiment, a popular data analysis platform, there are 10 ERC-20 tokens decoupled from Ethereum, and two of these have recently been listed on the famous San Francisco Coinbase cryptocurrency exchange.
In his report, Santiment cites three ERC-20 tokens that have been decoupled from Ethereum: Basic Attention Token (BAT), 0x (ZRX), and Maker (MKR). These three cryptocurrencies have, due to various factors, apparently ceased to follow the price of ETH, and now they are "dancing at their own pace," the report states.
In the picture above, the blue line represents the price of BAT, while the purple one represents the price of ZRX compared to that of ETH, all against the US dollar. We can see that cryptocurrencies apparently were following the trend line of ETH months ago, but soon they were decoupled.
The BAT, as covered by CryptoGlobe, rose last month after the Brave browser introduced a Chromium-based version of its software, which is 22% faster than the previous version. It also occurred at the start of this week when Coinbase Pro revealed it was listing the token.
ZRX also rose when Coinbase Pro announced it was listing it last month. The cryptocurrency, described as a "protocol that facilitates the low-friction peer-to-peer exchange of the ERC20 tokens on the Ethereum blockchain" on its whitepaper, forms the basis of Paradex, a decentralized cryptographic exchange that is integrated into the Coinbase.
The MKR token probably has decoupled thanks to its famous product, the DAI stablecoin. It has become a widely adopted cryptocurrency, which is apparently starting to be used as the de facto stablecoin on decentralized exchanges. It is algorithmically pegged to the dollar and has seen market capitalization increase in recent years.
Given these developments, Ethereum's ERC-20 tokens now have a market capitalization of $ 12.8 billion, just over 60% of Ethereum's total market capitalization. For Santiment, these cryptographic networks "were made waiting for the ETH to recover: they are preparing their own race".
While the crypts de-couple from ETH, this does not mean that the network is left behind. The analysis of the company adds:
Logically this price movement should eventually find its way to ETH as well. A similar model happened in 2016-2017 when ETH launched the explosive bull run and followed BTC. But the market is quite irrational that we prefer to stay in the present moment. And right now … the price dynamics of some tokens are now decoupled.
Ethereum, as covered by CryptoGlobe, is currently declining by almost 80% compared to bitcoin, the main cryptocurrency, since the "Flippening" – the scenario in which ETH becomes the number n for the market capitalization – seemed imminent.