Over the past week, a large number of altcoins have moved out of their sideways ranges to generate double-digit gains, and it appears that investors are interpreting the current trend as a new “altcoin season”.
As historical data shows, these altcoin breakouts usually occur after Bitcoin (BTC) entered a period of consolidation following a strong rally similar to that which the maket has seen over the past three weeks.
For many of the youngest top movers, traders only use tokens for technical analyzes that have a bullish market structure or are about to break out due to the increased volume. However, there are also coins that move up based on a number of fundamental factors.
THORChain (RUNE) is one of the tokens powered by more than the investor FOMO, and the digital asset was also one of the top altcoins in 2020.
Strong fundamentals support RUNE’s performance
The THORChain project was founded in 2018 and aimed to build an independent blockchain that could facilitate cross-chain transfers. The project is currently focused solely on the Binance chain’s BEP2 tokens, which somewhat contradicts its chain-independent aspirations, but there is a possibility that additional chains could be added in the future.
Currently, THORChain’s native RUNE token is being given out to traders who provide liquidity to the platform, and holders can also benefit from the stake pool. The liquidity pools are funded and managed in a similar way to Uniswap, although they are 50% RUNE tokens.
RUNE / USDT price chart. Source: TradingView
In the past two weeks, the RUNE token has increased 95% and while there is no schedule set for the mainnet to start, it is expected to be based on the Cosmos blockchain.
A beta version has been running on the BEPSwap DEX since August 2020 and the team regularly publishes detailed weekly reports on the progress of the development of the THORchain ecosystem.
On December 1st, the official THORchain Twitter account announced that the cross-chain integration of Bitcoin had been completed and successfully tested. The team also indicated that cross-chain integration with Ethereum would be the next goal of the project.
Another recent positive development came on December 31st when the Haven Protocol tweeted that the integration with THORchain would be completed within three months. The post also stated that staking would be possible by adding HXV and xUSD to Haven Protocol’s liquidity pools.
There are a few hurdles ahead of us
Last week, THORChain reached a new milestone when the platform processed 10 million transactions in three months. However, a number of analysts have heavily criticized the project for its relatively small number of nodes.
According to Delphi Digital, there are currently 67 nodes, mostly operated by AWS or Digital Ocean. This problem can be partly explained by the large amount of RUNE that must be used to become a validator.
RUNE Twitter user activity vs. USD price. Source: TheTie
Data from TheTie also shows that price spikes were associated with an increase and decrease in social network activity. This effect corresponds to development announcements and announcements of partnerships, as these messages tend to be shared and positively commented on by the growing community.
Currently, the project is highly valued by the community and altcoin investors, but its future success may depend on the team’s ability to deliver on its promises.
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