Written by: Cryptocurrency Researcher Ann

Compiled by: Baize Research Institute

By observing the market trends in the first half of 2023, I have compiled a list of tokens with relatively good volatility performance.

The key criterion for making the list is, of course, volatility. Like other parts of the market, if the market crashes, the tokens will also drop, just less than other tokens. However, what sets them apart is their strong rebounds, which can often yield daily profits of 10% or more, providing excellent opportunities for traders.

In addition, the price fluctuations of these tokens are also favorable for traders using the DCA (Dollar-Cost Averaging) strategy, providing immediate gratification. Don't you like assets that rise after buying at the bottom (support line)? Don't you prefer assets with a clear bottom rather than those that may not have a bottom?

Arbitrum (ARB)

The native token ARB of the leading Ethereum L2 Arbitrum is a young token—its issuance is not even a year old (as of March 2023). Since ARB was launched during a bear market, it has not yet experienced a "boom moment."

If you carefully examine the chart below (sourced from Coingecko), you can easily see how this token differs from others. Overall, ARB's performance this year is not particularly impressive. However, compared to most tokens that have plummeted by 90% since the peak of the bull market in 2021, ARB's price chart is far from pitiful.

This year, ARB has experienced several price surges, but there have been almost no fundamental reasons behind them. The most recent surge was during the ETHCC event, with rumors that the project team was about to make some major announcements (in reality, the announcements did not leave a lasting impression).

In addition to some technical analysis predictions, I have some theories about the reasons behind these surges.

ARB is still a long way from investor token unlocking. According to DeFillama data, the first unlocking of ARB will begin 200 days later, on March 22, 2024.

Therefore, since the token's launch, ARB has not experienced large-scale sell-offs. Coupled with the assumption that most of those who obtained ARB through airdrops have already sold, this has caused some fluctuations, creating profit opportunities for traders.

As the token unlocking date approaches, we can be certain that the ARB price will drop. However, having spent enough time in the cryptocurrency market, I know that token prices tend to rise before unlocking. I know this is a strange logic, but if you understand the game theory of the cryptocurrency market, you will know that investors will absolutely not sell their tokens cheaply. Rebounds "help" create FOMO, generating liquidity for the massive sell-offs by these investors. Although this theory is just an urban legend, it still makes sense when you think about it.

Fundamentally, even during a bear market, Arbitrum has successfully solidified its position as one of the successful projects. It has found a niche market, becoming the No.1 DeFi L2. Moreover, the GMX built on top of it has become a "mascot" protocol, attracting new users and increasing fee income.

In summary, the combination of token status and fundamental value makes ARB a good volatile asset.

Optimism (OP)

At the time of writing, OP is experiencing some volatility due to token unlocking (August 30, 2023).

The native token OP of the leading Ethereum L2 Optimism is a recent example of how a token surged before its unlocking event.

In two months, OP rose from $0.89 to $1.80. During the recent meme coin craze, OP was also one of the relatively "prosperous" tokens, rising alongside tokens like BALD or UNIBOT.

The reason for the surge (excluding any market irrational factors) is the recent improvement in Optimism's reputation. Coinbase has built their Base chain on top of Optimism's OP Stack and signed a revenue-sharing agreement beneficial to both teams. Not to mention, the launch of the OP Stack and OP Stack chain ecosystem during the ETHCC event also contributed to the excitement and price surge in the market.

The establishment of the partnership between Coinbase and Optimism proves the top-tier status of Optimism's L2, challenging Arbitrum.

In my personal experience trading OP, this particular token has significant demand. Reversals always occur quickly and quite violently during downturns. On Binance, OP's trading volume is considerable, making it one of the highest-volume tokens, with even larger trading volume in perpetual contracts.

Solana (SOL)

After last year's FTX catastrophic moment, Solana is on the path to redemption. After a year of setbacks, the community seems to be turning things around.

Due to the "SBF effect," I may be biased against Solana. (I dislike SBF, so I find everything he promotes daunting, including Solana.)

However, I have to admit that Solana is very resilient. Solana has its own loyal user and developer community.

Since February, Solana has achieved zero downtime—setting the record for the longest continuous uptime. This is something they can rightfully boast about. In contrast, Arbitrum has experienced several interruptions just this year. For example, in June, the network was interrupted due to a sequencer error.

In addition to SBF, Solana also has a major "group" supporting them—Jump Crypto. It is worth noting that Jump Crypto is on par with Wintermute and Alameda in terms of market making. Therefore, when SOL is deemed ready for a comeback, I expect the SOL price to rise unexpectedly.

This year, the SOL price has often remained within a certain range. It is clear from the chart that whenever SOL touches the lower range, it quickly rebounds.

Ethereum (ETH)

When it comes to not staying at low prices for long, no token can compare to Ethereum.

There is always demand for cheap ETH. For example, in the recent crash, while Bitcoin dropped from $29,000 to $26,000, the Ethereum price fell to around $1,400-1,500, but it actually only stayed there for a moment before quickly rebounding to $1,600.

Moreover, whenever there is a new "traffic explosion point" on the chain, the ETH price quickly rebounds with the rise in gas fees.

Ethereum has some liquidity issues because most circulating ETH is staked or locked in DeFi, rather than on the open market. Therefore, recently, ETH has not felt much in the way of ups and downs, which is a bit frustrating for traders and hodlers.

Conclusion

August is one of the most hated months in the cryptocurrency market in recent years. Now that August is over, what comes next?

You need to understand that things will not stay at the bottom or the top forever.

Typically, approaching the end of the year is a good time to accumulate positions. That's why I believe sharing this list of volatile tokens is a good idea. Because when the big market rally comes, you don't want to miss out on the (crazy) rise, as you will also miss out on the (crazy) fall.

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