Why is Aptos growing in January 2023?

The price of APT more than doubled during the latest crypto rally, outperforming most other Layer 1 blockchains. Some point to the superior technology as the main reason, while others cite the popularity of NFTs on Aptos. Let’s explore what fueled the surge and what we can expect from APT in the coming months.

APT is up 300% in 2023 as ETH is up only 36%

Between January 9 and 25, 2023 Bitcoin rose 37% from $17,000 to $23,300, triggering a crypto rally across the board. Aptos (APT) was one of the biggest winners, rising 180% to $14 in the same period and then to $19 on January 25 – a 440% gain since the start of 2023.

It’s interesting to compare the performance of various L1 and L2 blockchains from the top 50 by TVL since January 1 (as of January 23):

• Aptos APT +300%
• Ronin RON +160%
• Solana SOL +140%
• Optimism OP +135%
• Fantom FTM +100%
• Waves WAVES +80%
• Avalanche AVAX +65%
• Polkadot DOT +50%
• Cosmos ATOM +40%
• Ethereum ETH +36%
• Moonriver MOVR +36%
• Polygon MATIC +31%
• BNB Chain BNB +27%
• Tron TRX +15%

What caused APT to outperform the market so dramatically? Let’s look at several possible explanations, from DeFi and NFT fundamentals to the situation on exchanges.

Reason no.1: Launch Timing

Bear markets provide immense opportunities for startups with strong teams and real practical value. As the weaker projects are flushed out, those that continue building can become wildly successful in the next market cycle. Examples include Axie Infinity, Fantom, and Compound Finance: FTM rose 200x and AXS rose by 300x during the 2021 bull run.

When the Aptos mainnet went live on October 17, 2022, BTC was trading at $19,300. By that time, Aptos had already generated immense interest, attracting over 30,000 applications to its incentivized testnet. Aptos also had hundreds of thousands of followers on social media and more than 100 teams building dApps on it  (now over 200) – a very large ecosystem for a brand new network.

This combination of a strong interest and a bearish market left Aptos with enormous pent-up demand. As soon as general market sentiment turned more positive, APT was one of the first coins that everyone wanted to buy. This is similar to what happened to SOL in summer 2021, as the market recovered from the shocking BTC dump from $60k to $30k.

Reason no.2: Aptos x PancakeSwap

It’s not just the APT price that made a new all-time high, but also the network’s total value locked (TVL). TVL is arguably a better health indicator than price, because it shows the participation of real users, rather than speculative interest.

PancakeSwap accounts for a lot of the recent TVL increase on Aptos. It’s one of the largest players in DeFi with $3.5 billion in TVL, so when it first deployed yield farms (Syrup Pools) on Aptos, the new ecosystem got a boost.

On  January 6, PancakeSwap reported that its community had voted to continue the deployment on Aptos.  It also  revealed a plan to attract BNB Chain-based projects to Aptos and vice versa. On January 11, the DEX announced that it accounted for a majority of the TVL on Aptos. From that point onward, the price of APT started growing even faster.  

Also, we shouldn’t overlook the emergence of other DeFi projects on Aptos. including Pontem’s Liquidswap DEX, as well as our close partners Ditto Finance, Aries Markets, Tortuga Finance, Argo, Tsunami Finance, Hippo, Kana Labs, AUX, Abel Finance, and others.

These protocols attract new users to the ecosystem, which generates organic demand for APT, as it is needed for liquid staking, DEX pools, loans, etc. (By the way, you can now enjoy liquid staking with Ditto right in Pontem Wallet for Aptos thanks to our native dApp integration.)

Finally, on January 20, Binance announced that it was opening Liquid Swap liquidity pools for APT/USDT and APT/BTC. Users can earn up to 80% APR in BNB. This should  attract even more DeFi liquidity to APT, ultimately benefiting the whole ecosystem.

The Aptos DEX Liquidswap(not to be confused with Liquid Swaps on Binance) has just launched its own yield farming program called Hydroponic Farms. You can even get a 50% reward boost if you own a Pontem Space Pirate NFT. In addition to the farming APR, you can earn up to 43% APR on trading fees as a liquidity provider. Check out Hydroponic Farms here.

Reason no.3: Short Liquidations

When APT was first listed on Binance and other exchanges in October, it quickly went to $13 and then dropped to $8. This is a normal trajectory for a newly listed coin as early speculators and airdrop recipients unload their tokens. However, this led some to consider APT ‘over-hyped’.

As a result, a lot of traders expected the same sort of sharp drop as the APT price approached the old ATH. They started opening short orders, in order to profit from the price falling.

However, the buy volume on Aptos remained very high. Traders were forced to cover their shorts, urgently buying APT, or see their stop loss get hit (in which case APT would be purchased automatically at the market price). Both generate even more buying pressure, causing the price to trend higher.

CoinGlass data shows massive short liquidations on APT (including $14 million on January 20 alone):

@HsakaTrades, one of the most respected traders and analysts in the space, noted that a large entity was shorting APT all the way up from $7 and getting liquidated, partly fuelling the rally.

Reason no. 4:  Aptos NFTs

NFTs can be a major demand catalyst for a coin. We’ve just seen it with SOL last year. News in the NFT community moves fast, so the word spread quickly  that you can find unique art, a very active market, and extra low fees on Aptos.

Some crypto media listed a surge of interest in Aptos NFTs as one of the reasons for the APTprice rally. Indeed, Topaz, the largest NFT marketplace on Aptos, reported a huge increase in the NFT trading volume once the price of APT was already above $10. In particular, the volume on AptoPunks was up 2,500% in 24 hours, and up 3,200% on BabyApetos.

However, the reverse is more probable. The price rally made everybody talk about APT and the Aptos NFT ecosystem by extension. New users flocked to the market, giving early collectors a chance to sell the NFTs they had bought when APT still traded at $4.

Once that selling by early investors was done, the activity level dropped. For example, on January 25 the 24-hour volumes for AptoPunks and BabyApetos fell 92%  and 97% respectively.

How high can APT go?

In the latest rally, APT outperformed, so it could potentially see a new ATH above $15 if BTC keeps rallying toward $25,000  Of course, this is not financial advice, and we could easily see a serious pullback before such a move occurs. Past results should not be read as an indicator of future success.

In the mid-term, the crypto market is still on shaky ground. Some prominent traders believe that the bear bottom isn’t necessarily in yet, while others are calling for a massive rally that will catch everyone by surprise.

Looking further ahead, Aptos certainly has great potential as the most interesting L1 launched during this bear market. Its large DeFi ecosystem could become the main growth driver in the next market cycle.

Once again, we can draw a parallel with the ‘Solana season in 2021, when the network’s DeFi TVL went from $140 million in March to $13.4 billion in December - an almost 96x increase. This made Solana the second-biggest ecosystem after Ethereum. In the same period the price of SOL went up almost 400x from $0.65 to $250.

In the first few months after launch Solana saw a very gradual increase in TVL, followed by an explosion. We can see a similar slow accumulation in the Aptos TVL chart.

Aptos has technological advantages over Solana. In addition to being even faster, it is stable and safe thanks to the use of the Move language, Move VM, and a novel form of BFT consensus. It doesn’t suffer from outages, which caused losses to Solana's DeFi users and serious price dumps. Therefore, Aptos’ DeFi TVL has an even bigger potential for growth.

Vitalik Buterin believes that one should keep building (or, rather, BUIDLing) instead of watching crypto prices. In the case of Aptos, the ecosystem is steadily growing and teams keep building  regardless of the market conditions, which is a good sign for the future. We will keep updating you on APT, DeFi, NFTs, and all things Aptos --  follow us on Twitter, Discord, and Telegram so you  don’t miss a post!

About Pontem

Pontem is a blockchain product studio building for Aptos and the broader Move ecosystem. We work closely with the Aptos team to produce truly innovative and secure dApps and dev tools, including the Liquidswap DEX, Pontem Walle,; the first Solidity-to-Move code transpiler, ByteBabel, and Move Code Playground, the first browser code editor for Move.