The Bitcoin (CRYPTO: BTC) price is down 4% over the past 24 hours to US$37,749 (AU$53,626).
That brings the losses for the world's biggest cryptocurrency by market cap to 21% so far in the New Year.
And it's not just the Bitcoin price that's come under selling pressure.
The Ethereum (CRYPTO: ETH) price is down a painful 30% since 1 January.
But the story for the wider basket of cryptos is still worse.
The charts at CoinMarketCap tell us that aside from three stable coins (tied to fiat currencies) showing fractional percentage gains in 2022, only two of the biggest 80 cryptos are well into the green.
2 cryptos far outpacing the Bitcoin price in 2022
If you scroll down the list of top cryptos by market cap you eventually get to number 26, FTX Token (CRYPTO: FTT) and number 27, Unus Sed Leo (CRYPTO: LEO).
At the time of writing, FTT is up 4% year to date. While that's hardly shooting the lights out, remember that the Bitcoin price is down 21% over that time. And the S&P/ASX 200 Index (ASX: XJO) is down 8%.
For a really booming gain, however, there's Leo. It's up 57% so far in 2022.
So, what do these tokens do?
According to CoinMarketCap, "FTT is the native cryptocurrency token of the crypto derivatives trading platform FTX".
And Leo "is a utility token that's used across the iFinex ecosystem … allowing Bitfinex users to save money on trading fees".
In other words, they're both what are known as exchange tokens.
Why are these exchange tokens outperforming?
According to crypto analysts, the outperformance of Leo and FTT over the likes of the Bitcoin price in 2022 is closely tied to the volatility gripping crypto markets in recent months.
Exchange tokens tend to do well when the companies they're tied to (crypto exchanges) perform well.
According to Clara Medalie, research director of crypto trading data company Kaiko (quoted by Bloomberg), "FTX's token is strongly correlated to any positive news coverage. FTX has had a better year than most other exchanges that have their own exchange tokens, so it isn't surprising that FTT is positive."
Looking at the Bitcoin price performance, Jeff Dorman, CEO of digital asset fund manager Arca, said:
For some reason, people still think Bitcoin is a defensive asset, even though it has absolutely no characteristics of a defensive asset. The things that should be defensive are exchange tokens because there's real revenues, cash flows and amortizations.
Dorman pointed to the increased volatility and greater trading volume as benefitting tokens like Leo and FTT over Bitcoin and Ethereum:
Fundamentally, who benefits from the volatility? The exchanges. Exchange [tokens] should outperform because their volume and revenues go up. Smart investors are investing in exchange tokens. Certainly, anybody who does any real fundamental analysis and cares about the growth of real business.
How the rest of 2022 plays out remains to be seen.
But so far, exchange tokens like Leo and FTT have left the Bitcoin price wallowing in their wake.
