This under-the-radar crypto is up 112% in the past month. Here's why the rally could have legs

This exchange token is surging and prominent new players have their sights set on even bigger goals.

| More on:
A hip young man with a beard and manbun sits thoughtfully at his laptop computer in a darkened room, staring at the screen with his chin resting on his hand in thought.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Halloween is almost here, and there's one crypto that looks like it's back from the dead. That's Huobi Token (CRYPTO: HT) which is up 112% over the past month. This surge is particularly impressive during a challenging period for the broader crypto market.

What is Huobi Token, what's behind this rally, and why does it look like the rally could have legs?

What is Huobi Token? 

Huobi Token is the native token of Huobi Global, currently the world's 13th-largest crypto exchange by volume, according to data from CoinGecko. Huobi Token is the 39th-largest crypto by market cap, with a valuation of $1.4 billion. As an exchange token, holding Huobi Token gives perks to Huobi users, such as lower transaction fees on the exchange.

The Huobi exchange's popularity once rivaled the likes of Binance and Coinbase Global, but China's crackdown on crypto trading was a body blow to Huobi Global, which had a large presence in China. Huobi Token reached a price of nearly $40 in May 2021 but by June 2022, it had plummeted to $4.22, due to the ban in China as well as the broader crypto market sell-off. Huobi Global and Huobi Token were in need of a catalyst, and help was on the way. 

About-face 

Huobi Token has staged a furious rally over the past month and has its sights set on further gains. The rebound was spurred by news that a new investor, Hong Kong-based asset manager About Capital, had acquired the company from controlling shareholder Leon Li.

About Capital is led by Ted Chen, who previously started Greenwoods Asset Management, one of China's top hedge funds. About Capital vowed to invest new capital into the exchange and to work on international expansion.

Chen is bullish on Huobi Global and the cryptocurrency industry as a whole, stating:

Huobi Global offers the best of breed virtual asset investment services to millions of international users. We believe the virtual asset industry is still in its early stage and there is tremendous upside for long term growth.

This was a boon for the exchange and token, but there was more good news to come. Huobi said that as part of its international expansion efforts, it would create a "global strategic advisory board led by leading industry figures" and it delivered on these efforts.   

The Sun also rises

One of these industry leaders that Huobi managed to recruit to its advisory board is Tron (CRYPTO: TRX) founder Justin Sun. Sun is one of the most high-profile investors in the crypto scene and is also reportedly one of Huobi Token's largest holders.

Seventy-four million Huobi Tokens were reportedly transferred from Huobi's wallets to two wallets associated with Sun and his Poloniex exchange, so Sun is clearly motivated to see Huobi Global and Huboi Token succeed. Sun has spoken about the importance of Huobi Token as a core part of Huobi Global's value proposition and growth plans, and compared it to the integral role that Binance Coin has played in Binance's success.

Sun's presence has brought significantly more attention to Huobi Token, and his extensive on-the-ground experience promoting cryptocurrency in places like South America and the Caribbean lends credence to Huobi's international expansion plans. Sun also hopes that Huobi Global will one day re-enter the Chinese market, if and when regulations allow.

Interestingly, Sun also announced plans to merge the Huobi ECO chain with the Tron and BitTorrent (CRYPTO: BTT) ecosystems and pledged to invest in building all three ecosystems, although it isn't yet clear what this will actually entail. 

Here's why this all bodes well for Huobi Token and its investors. If About Capital and Sun are able to execute their growth plans, Huobi Global will gain new users, which will drive more trading volume on the exchange. This will generate higher revenue for the exchange and Huobi Global is committed to using 20% of exchange revenue to buy back or "burn" Huobi Tokens each quarter, similar to how Binance burns Binance Coins. Burning these tokens reduces supply and theoretically makes the remaining tokens more valuable to current holders, in a manner similar to a company buying back shares of its stock.

Ultimately, it's important to remember that investing in cryptocurrencies further down the list in terms of market cap can be a risky venture. There is no guarantee that Huobi Global's plans will succeed, and there is lots of competition in the crypto exchange market. However, for risk-tolerant investors, Huobi Token has a lot of potential.

Huobi still retains some name recognition and brand value from its heyday, and this, combined with the deep pockets and big ambitions of its new backers, makes it an intriguing asset with a lot of upside. If they can build out Huobi Global, it will ultimately boost the value of Huobi Token as increased revenue from more transactions will fuel the burning of more Huobi Tokens. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Michael Byrne has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Coinbase Global, Inc. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on International Stock News

A male investor sits at his desk looking at his laptop screen holding his hand to his chin pondering whether to buy Macquarie shares
International Stock News

If you invested $10,000 in Nvidia stock the day ChatGPT came out, this is how much you'd have today

Buying Nvidia when the disruptive AI chatbot launched would have been a smart move.

Read more »

A Tesla car driving along a road at sunset
International Stock News

Why Tesla stock was climbing today

Investors were encouraged by news of a price hike on the Model Y.

Read more »

Plate with coloured wedges being parcelled out like a slice of pie representing a share split
International Stock News

Stock-split watch: Is Nvidia next?

Nvidia last split its stock when it traded for a pre-split $744 in 2021.

Read more »

A woman in jeans and a casual jumper leans on her car and looks seriously at her mobile phone while her vehicle is charged at an electic vehicle recharging station.
International Stock News

1 Wall Street analyst thinks Tesla stock is going to $125. Is it a sell?

Tesla is no longer a magnificent stock, according to a Wells Fargo analyst.

Read more »

A young man goes over his finances and investment portfolio at home.
International Stock News

Is Nvidia stock a buy?

The company's stock could rise 40% over the next two years and outperform the S&P 500.

Read more »

Man with hands in the middle of two items with money bags on them.
International Stock News

Is Nvidia headed for a stock split?

Nvidia stock has split five previous times in the company's history.

Read more »

Digital rocket on a laptop.
International Stock News

Nvidia shares surged (again) today. Is it too late to buy the red-hot artificial intelligence (AI) growth stock?

Nvidia stock has gained nearly 300% over the past year. Can investors still profit from this AI stock?

Read more »

A woman holds a soldering tool as she sits in front of a computer screen while working on the manufacturing of technology equipment in a laboratory environment.
International Stock News

Can you buy Nvidia shares on the ASX?

This stock has rocketed higher. How do we get access to it?

Read more »