Native Crypto Exchange Tokens Hint at First Sign of Broader Market Recovery

Crypto exchange tokens are faring much better than bluechip cryptocurrencies, including bitcoin and ether, in the lingering aftermath of Terra’s implosion

article-image

Blockworks exclusive art by axel rangel

share
  • Crypto markets bounced back on Thursday after days of selling pressure inspired by the collapse of DeFi ecosystem Terra
  • Bitfinex’s native token Unus Sed Leo has performed particularly well, thanks to booming trade volumes on the exchange

Crypto markets have hit their lowest point in more than a year as the fallout from Terra’s implosion weighs heavily on essentially all digital assets. 

The total market capitalization of all cryptocurrencies bottomed out at nearly $1.1 trillion during Thursday morning trading. That’s less than half their market cap at the start of the year, when crypto was collectively valued at $2.2 trillion.

Since the nadir, however, traders have returned about $135 billion to crypto’s total market cap, although it’s still unclear whether the bounce will stick.

The top 10 cryptocurrencies (excluding stablecoins) on average recovered more than 14% since the market bottomed out — led by alternative layer-1 token Avalanche and Binance’s native exchange coin BNB, which each gained about 25%.

Market leaders bitcoin and ether are recovering comparably slower, rising around 9% since the local bottom.

In fact, some of the most resilient cryptocurrencies of late have been the native tokens that power trades on exchanges – particularly Unus Sed Leo (LEO) of Bitfinex. 

Akin to Binance’s BNB coin, Bitfinex traders can save on fees by holding the token (LEO doubles as a mechanism to reimburse users for funds lost in a sizable 2016 hack).

But LEO has fallen less than 2% since Terra’s algorithmic stablecoin UST first lost its dollar peg. Major cryptocurrencies Solana, Polkadot and XRP have all shed around 25%.

And over the past day, the native cryptocurrency of Bitfinex competitor FTX, FTT, dropped less than 4%, while ether and Cardano plummeted 13%.

Daniel Matuszewski, co-founder of crypto investment firm CMS Holdings, told Blockworks exchange tokens have benefited from booming trade volumes inspired by volatility, mostly on account of inbuilt burn mechanisms.

Those mechanisms typically serve as a method of rewarding token holders. Exchanges buy back tokens and burn them — removing them permanently — reducing circulating supply, while beefing up buying power in a bid to boost prices.

“It’s been a really, really large 24 hours for the exchanges, so there’s been a ton of burning and buying,” Matuszewski said. “The exchanges are just doing an outrageous amount of business right now and earning loads of money, and that flows into their tokens.”

Exchange volume is altogether up 14% in the past day, according to data from crypto index provider Nomics, with Bitfinex jumping a whopping 34%.

Matuszewski said the worst of the Terra debacle could be in the rearview mirror in short order.

 “When Terra died, that obviously hurt a lot of people, and I think as a function of that they had to de-risk elsewhere,” he said. Added Matuszewski: “I’m sure that people had to make margin calls and a lot of forced selling happened as a result of the de-pegging. I think that part of the market cycle is largely over.”


Get the news in your inbox. Explore Blockworks newsletters:

Tags

Decoding crypto and the markets. Daily, with Byron Gilliam.

Upcoming Events

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Research Report Templates.jpg

Research

Figure, founded by former SoFi CEO Mike Cagney, has emerged as a leader in onchain RWAs, with ~$17.5B publicly tokenized. The platform’s ecosystem volume is growing ~40% YoY as it expands beyond HELOCs into student loans, DSCR loans, unsecured loans, bankruptcy claims, and more. Operationally, Figure cuts average loan production cost by ~93% and compresses median funding time from ~42 days to ~10, creating a durable speed-and-cost advantage.

article-image

The reserve will collect protocol revenues to back W token, alongside new yield and unlock schedule

by Blockworks /
article-image

Layer 2 network Taiko integrates Chainlink Data Streams to deliver reliable onchain market data for DeFi and institutions

by Blockworks /
article-image

The license will allow Bullish to operate in New York under strict digital asset rules

by Blockworks /
article-image

The derivatives giant expands crypto offerings with new Solana and XRP futures options, pending regulatory review

by Blockworks /
article-image

Nasdaq-listed firm to fund Solana token purchases and expand its blockchain-focused treasury strategy

by Blockworks /
article-image

The partnership deepens liquidity and lowers conversion costs as demand for regulated stablecoins grows worldwide

by Blockworks /