EOS Underperforms During Bullish Cycles, But That's About to Change

Typically, financial assets that outperform during bear markets and underperform during bull markets are those that are considered defensive in nature. An example of such assets would be bonds, especially government bonds, which are seen as a safe haven during market downturns as interest rates fall during bearish cycles, leading to a rise in existing bonds.

Another example of a defensive asset is certain types of stocks, such as consumer staples and utilities, which tend to be less sensitive to changes in economic conditions. During a bear market, investors may flock to these defensive stocks, as they are perceived to be relatively stable and can provide a reliable source of income.

These “defensive assets” tend to be less sensitive to changes in economic conditions and are often sought after by investors seeking to preserve capital during market downturns. In the cryptocurrency market an example of such an asset would be stablecoins which remain stable during market shifts and can be leveraged (staking, liquidity provision) to provide a reliable source of income.

For EOS however; it is not a stablecoin as its value rises and falls based on ongoing market conditions. In recent years its performance in the cryptocurrency market has been greatly underwhelming as it has underperformed relative to other crypto assets and stakeholders’ expectations. EOS’ market performance in recent years has been affected by a variety of factors and the efforts to overcome them could see a massive reversal in EOS’ performance in the cryptocurrency market.

The performance of financial assets during different market conditions can be influenced by a variety of factors, including economic trends, individual project performance, and investor sentiment.

Crypto’s economic trends

In recent months we’ve noticed that EOS has performed well during this recent bear market cycle. However every time the cryptocurrency market starts to turn bullish, EOS recedes in its market cap performance. This trend seems to suggest that EOS has strong token holders who don’t usually sell during bearish market trends. At the same time it suggests that EOS doesn’t attract as many new investors during bullish market trends.

Simply put; EOS is less volatile compared to other cryptocurrency projects in the Top 100 of CoinMarketCap. It holds well during downturns in the market when other projects are dumping, and holds steadily during market uptrends when other projects are pumping.

EOS also falls victim to its own strengths when it comes to decentralization. Its ICO (initial coin offering) ensured that EOS’ token was fairly distributed to as many people as possible, arguably making it the most decentralized token in the cryptocurrency market. This, by design, has made it difficult for any one person or entity to significantly move the price either way. EOS requires a lot more energy to intentionally sway its price one way or the other.

This steadiness in its price performance has meant that EOS always gets outperformed by other projects that have higher percentages of token centralization, as the large token holders (whales) can hold the token up by not selling to ensure there’s less sell pressure, which amplifies the buy pressure whenever there’s a demand.

Having centralized token ownership also has its drawbacks because when the whales do sell, the price then takes a massive hit to the downside. Which is why we’ve seen many booms and busts of the newer projects such as memecoins. However, during a bull market, investors do prefer to invest more in these growth-oriented crypto assets, which results in rapid price increases for such assets, causing “defensive” crypto assets such as EOS to underperform.

EOS’ individual performance

Crypto market performance

As pointed out earlier, EOS’ market cap and price performance has been underwhelming to say the least. At its peak in 2018, right before its mainnet launch, EOS was ranked 5th by market cap and reached an all-time high price of $21.64. Since then it has dropped on both metrics (market cap and price) while industry leaders, Bitcoin and Ethereum, have gone on to make new all-time highs on all metrics user adoption/token holders.

EOS has even gotten surpassed by newer blockchain projects with similar value propositions such as Binance Chain, Cardano, Solana, and Polygon, etc. So EOS’ individual performance in the cryptocurrency market has been less than stellar (no pun intended) for the past five years.

I mentioned earlier that the EOS token’s decentralized distribution made it harder for it to pump in price, and also the fact that it had a year-long token sale, which saw every market participant buy the price up. So when it did finally launch (after the bull market) there was no one left to buy while everyone was looking to sell.

Also, the company that had done some of the best marketing the industry has ever seen - stopped with the marketing once the yearlong token sales event was complete. Which meant since everyone in the industry had already bought tokens, it was impossible to attract investors from outside the industry. Not without marketing. And the company didn’t seem interested in that as they had already hit a $4 billion jackpot.

From there the only race for EOS’ price was to the bottom, and anyone who held on the longest had lost the most.

Technical developments (performance)

The one area where EOS has continued to excel is in its technical prowess. Since launching in 2018 as the most performant blockchain in the industry at the time, EOS still is arguably the most performant decentralized blockchain in the world today. Its underlying blockchain protocol, Antelope, powers the industry’s most technically competitive blockchains such as WAX, Telos, UX Network, Ultra, and Proton etc.

Block.one, the company behind the EOS token sale, has since been removed as a stakeholder in the EOS network and its community has taken over all of the network’s technical, business, and community developments. The underlying blockchain protocol was also forked and rebranded from EOSIO to Antelope; following Block.one’s failure in its responsibility to maintain and upgrade the codebase.

Despite its recent tumultuous history - involving politics, power struggles, and a declining token price, among other things - the EOS network has maintained a 100% uptime. Continuing to prove its value proposition as a reliable, affordable, scalable, and highly performant blockchain network. In fact, EOS has evolved beyond everyone’s expectations, especially considering everything else it’s been going through.

Today EOS is operating on the community-driven Antelope protocol, and is part of a coalition that collaborates on efforts for further protocol development and adoption of the blockchains it powers. Additionally, EOS and the other three members of the Antelope Coalition (WAX, Telos, and UX Network) have implemented inter-blockchain communication (IBC) between them. This connects the four blockchains so that they can easily exchange data, information, and value between them.

Then there’s the more recent initiative, EOS EVM (Ethereum Virtual Machine), to help improve Ethereum’s performance and scalability. The EOS EVM initiative enables Ethereum (Solidity & EVM) developers and businesses to port their applications on a more performant and scalable environment that leverages EOS’ blockchain network.

Investor sentiment

Due to the low EOS price and the encouraging developments within its ecosystem, more and more investors are realizing the potential price upside of EOS. Its token continues to increase and diversify its utility across multiple blockchain ecosystems beyond its main network. EOS’ (ENF’s) collaboration with multiple partners and stakeholders from these other blockchain ecosystems also suggests that there’s growing support for the EOS ecosystem.

These strong metrics are catching the attention of cryptocurrency investors, even those that are just entering the cryptocurrency market. Those investors who had gotten into EOS back in 2017-2018 and left because of everything that’s been discussed regarding its past are also slowly rediscovering “The New EOS”. With the new EOS being a decentralized blockchain network and community that fought off a corporate entity exploiting the EOS network for its own selfish interests.

EOS has showcased first-hand that a global community is much more powerful than any billion dollar corporation and that decentralized blockchains are consensus networks owned by the people in benevolence to the people. Since taking control of the network, the EOS community has accelerated efforts in initiatives that benefit both the network and its community. Results of which are starting to show and rallying positive investor sentiment.

Outlook

EOS stakeholders and potential investors will continue to monitor the developments in these next couple of months. The main thing they’ll be looking for is whether or not the trend of previous years can be reversed, and if EOS can begin gaining lost ground.

Judging by the new investors and partners that are joining the EOS ecosystem, it seems there’s a growing sentiment that EOS will turn things around. Not only with its price but, perhaps more importantly, with increased developer and user adoption of its blockchain network. Price and adoption usually emulate each other - when one improves so does the other.

WIth its innovative developments and efforts to spread its message across the industry about how it has been revitalized, EOS could attract enough adoption to turn things around during the next crypto bull market. To do that it’ll need to have enough utility and adoption to offset the amount of money being used to fund all these initiatives.

Considering that the EOS Network Foundation (ENF) has only been put in charge of EOS network developments for a little over a year ago and seeing the massive progress EOS has achieved in that time, it’s safe to assume that all the progress will result in much better market performances. The increase in media coverage also is a positive sign that EOS is no longer being stigmatized by the general crypto industry.

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