Top cryptocurrencies to watch in February as market volatility explodes

After a turbulent January in which most of the market saw heavy declines, we’ve picked out some of the top cryptocurrencies for this month.

As I write this, extreme fear has gripped the sector, with sentiment at its lowest point in months. Bitcoin’s price closed a monthly candle in the red for the fourth consecutive time – something that hasn’t happened since the 2018 bear market.

But as the popular investment saying goes: the best buy is when there is blood on the streets. There’s no telling if the market will recover and the worst will be behind it, but if you’ve been looking for a discount, here it is.

That said, let’s take a look at the top cryptocurrencies to put on your watchlist in February.

Hyperliquid: the price is actually… going up?

Hyperliquid is a decentralized exchange that allows users to trade perpetual futures (and spot) of both cryptocurrencies and traditional assets. The latter is done via a protocol upgrade, largely known as HIP-3 (HIP stands for Hyperliquid Improvement Proposal), which went live a few months ago, but it seems to be happening much faster.

The exchange’s own cryptocurrency, HYPE, is up as much as 25% in a month, while almost everything else is trading in the red. And speaking of almost everything else, HYPE is one of two top 20 coins by market cap topping the monthly chart.

It’s true that Hyperliquid has been in the spotlight for a while, but the protocol seems to hold up well during periods of extreme market turmoil. HYPE’s price is determined in part by constant buying pressure on behalf of the protocol’s Assistance Fund, which automatically converts 99% of fees generated by Hyperliquid into HYPE at open market prices. For reference, these fees have not often fallen below $2 million per day in the past year, while simultaneously going parabolic during times of market volatility.

HYPE is one of the few protocols generating hundreds of millions in revenue annually, and many in the industry consider it a product that is a perfect fit for the market.

Bitcoin: time for recovery?

As I mentioned at the beginning, BTC’s price had four consecutive negative monthly candle closes – something we haven’t seen in about eight years. That is a very long period in the crypto universe. Of course, past performance is never an indication of future returns, but it is something to think about.

Bitcoin’s price is currently trading below $80,000 – up more than 40% from its all-time high.

But it’s also true that the most recent decline wasn’t completely isolated to cryptocurrencies. The rally in precious metals like gold and silver came to an abrupt halt, with gold plunging more than 20% and silver falling more than 50% in value from just a few months ago.

That’s not typical of traditional assets, much less gold, which has historically been incredibly static in terms of price performance. Many analysts expect the gold price to recover, inevitably dragging silver along with it, driven by geopolitical tensions and economic power plays by the US, EU, China and others. If that happens, the crypto markets may also see a relief rally, with Bitcoin most likely taking center stage as the main asset. This inevitably brings us to…

GOLD backed coins

Cryptocurrencies such as PAX Gold (PAXG) and Tether Gold (XAUT) are digital representations of an ounce of gold and backed by its physical equivalent. If the past few months have taught us anything, it’s that it’s a wild market for precious metals.

Analysts are not writing off the rally, and many believe a recovery is on the way. After all, we do not see a 20% drop in the gold price every week. Moreover, the international landscape remains as uncertain as ever. The US is about to appoint a new chairman of its Federal Reserve, its relationship with what was once its biggest partner in the face of the EU is in doubt, the war in Ukraine continues, there is tension in the Middle East and the fate of Greenland remains unknown after talks in Davos.

While all this should spell trouble for risky assets like stocks (and crypto), risky assets (like gold) should thrive. Those of you who don’t like off-ramping can alternatively look at gold-backed cryptocurrencies.