Bitcoin
Why Bitcoin, Ethereum and Dogecoin emerged today
Risk assets in general received a boost from the Fed, with these three tokens boasting a market-beating advantage.
The cryptocurrency sector is getting a nice boost today from yesterday’s comments from Federal Reserve Chairman Jerome Powell. The market received a shock from Powell’s comment in a press release; he suggested that the direction of the Fed’s next move will likely be smaller. The market had already predicted some possibility of an increase in interest rates, which seems to be out of the question, at least for now.
With a more accommodative monetary policy environment likely ahead, risk assets across the curve have seen a big boost over the past 24 hours. Of course, the further investors move along the risk curve, the more prolonged this movement can be. For major cryptocurrencies Bitcoin (Bitcoin 4.03%), Ethereum (ETH 2.97%) and Dogecoin (DOGE 6.79%), means a 24-hour move of 3.8%, 2.2% and 4% respectively as of 4pm ET on Thursday.
Additionally, there are some token-specific factors at play with these three tokens that investors appear to be pricing in today. Let’s dive into what’s moving these closely watched digital assets.
The demonstration continues
Since reaching a new all-time high around the time of its most recent halving, Bitcoin’s recovery has faltered. Expectations for a potential continuation of this fall were consolidated due to economic factors that could affect the largest cryptocurrency in the world.
But with interest rate hikes seemingly out of the question, analysts are increasingly bullish on Bitcoin in the short and medium term. Lower interest rates are expected to cause the US dollar to fall, inflating the price of various raw materials and goods that act as stores of value. For those who believe in this Bitcoin thesis, this is great. In fact, yesterday’s press conference probably had the biggest impact on Bitcoin for this very reason.
Ethereum’s status as a commodity or store of value is also debatable. In second place in terms of market capitalization in this sector, Ethereum stands to benefit from a similar trend of capital flow to cryptocurrencies that Bitcoin investors have benefited from. This is because the market still expects the Securities and Exchange Commission to approve spot Ethereum ETFs at some point (although some suggest it is possible the SEC could still consider this asset a security), which should improve supply and demand dynamics. around this token. As Ethereum moves to a proof-of-stake protocol and adopts some deflationary measures for its token, there is a strong bullish case in the market that the same drivers that carried Bitcoin on its run to record highs could be at play for the Ethereum this year.
Dogecoin remains among the most speculative crypto assets in existence, which means it is the best choice for traders and investors who want to take advantage of short-term price swings in the market. It’s no surprise that Dogecoin has seen more pronounced movement than its larger peers for this reason alone. However, large liquidation data tied to a previous decline in these three tokens in recent days could also play a role in today’s rally. Investors appear to be looking for any reason to increase risk and put capital to work this fall. This recent macrocatalyst appears to have provided the necessary boost.
Is this rally ready to continue?
Today’s change needs to be contextualized. Bitcoin fell to a low of around $58,000 per token yesterday, and although it is moving towards the $60,000 mark at the time of writing, it is still a long way from its all-time high of around $58,000 per token. $73,000 reached earlier this year. Therefore, there is certainly upside and downside potential in the short term as this token has risen rapidly in a short time.
Other cryptocurrencies like Ethereum and Dogecoin tend to follow Bitcoin’s lead, so I would say this is the token most investors should focus on right now. I am of the opinion that if a series of bullish catalysts materialize in the coming days, it is entirely possible that Bitcoin could make another run to a new high, and Ethereum and Dogecoin could follow. It’s just a question of whether this particular macrocatalyst can be amplified by some additional news. There’s not much on my radar at the moment, so I’ll leave this recent pop aside.