Something interesting is happening in the cryptocurrency market. Some tokens are currently holding more ETH than their current market cap. A recent analysis made by Santiment has shown this information.
For example, Gnosis has nearly twice more ETH than it has of market cap. It holds $54 million USD worth in ETH and it values “only” $33 million USD. SingularDTV is a similar case, but even bigger. The company has $61 million USD in ETH and a value of only $13 million USD in the market cap of its own tokens SINGLS. This is almost six times more value with ETH.
Another example is Aragon’s $64 million USD worth of ETH and current market cap of $28 million USD. Oddly, this is simply not uncommon and it does not happen only to very small companies. Digix, which is considerably larger than these companies, also has the same problem.
The project for tokenized gold is the biggest ETH holder in the world after the Ethereum Foundation. The company has about $130 million USD worth in ETH. Their market cap, however, is based in gold, but only has a market cap of $107 million USD.
This makes for a very curious case when the company itself holds a lot more money than it is worth, being about $20 million USD richer than the DGD holders. It is interesting to perceive that not even in a token backed by gold and with the prices of ETH falling, the calculation still does not add up.
Digix To Give Permission To Holders To Spend $20 Million USD In ETH
Possibly as a way to fix this issue, Digix has a plan to let the DGD holders spend about $20 million USD worth in ETH. While some investors are strongly against the idea, others like it so far. Some suggested that the company should take a fiat loan by collateralizing the ETH ia Dai instead of selling it.
However, despite what Digix might or might not do, one problem persists: how does this situation begin in the first place?
Altcoins Are Less Valuable Than Big Coins Like ETH
The easier answer to solve this mystery is to think that the market simply valued big coins more. The whole market lost a lot of money in 2018 and ETH ended up losing less than these altcoins. The focus is always greater on the big tokens, as investors expect the altcoins to go up or down according to the trends.
This is especially true when you consider that Bitcoin moves the whole crypto market up and down together with it. Another issue is that many ICO devs are simply not delivering a lot, as most ICOs were failed or scams. The ones which already exist are mostly underperforming and sometimes there is not enough capacity for growth. All this impacts the prices.
In Digix’s case, for instance, there are many alternatives for trading gold, so the tokenized option offered by the company is not always the most interesting one for investors. Also, most of these companies simply did not spend their money in a good way. ETH was a lot more valuable in December and they simply held it until it lost most of is value. Investing in some advertisement could have been a great idea.
The harsh truth is that ETH is simply better than most of these companies’ tokens, so it clearly has more value and it has been less devalued over the course of the year. While some projects like Digix have actually achieved quite a bit, most of them simply did not.
The general market sentiment is that these companies are simply not delivering. There are many responsibilities to be held and, while they are not able to actually offer better results, we are afraid that the situation will simply continue.