The crypto industry is once again experiencing an upward movement, with Bitcoin, Ethereum, and Dogecoin leading the way. As of 2 p.m. ET on Friday, Bitcoin was up by 3% from its closing price on Thursday, Ethereum was up 4%, and Dogecoin was up 5.3%. Cryptocurrencies have been volatile over the past year but have been steadily increasing since mid-October.
The Rise of Cryptocurrencies
One of the major developments in the crypto space is BlackRock’s pursuit of an Ethereum exchange-traded fund (ETF). BlackRock has been trying to obtain permission to launch a Bitcoin ETF as well. While there are already ways for investors to buy crypto on traditional exchanges, ETFs offer greater efficiency, which is why BlackRock and other entities are seeking approval for them.
If ETFs are approved, it is expected that more investors will pour money into tokens, driving up prices. Traders are anticipating this and bidding up values in anticipation of ETF approvals. However, the Securities and Exchange Commission (SEC) has yet to approve crypto ETFs or establish clear rules for cryptocurrencies. As a result, the industry remains uncertain, and Congress has not yet agreed on a regulatory framework. Many investors believe that ETFs could be a way to make crypto more mainstream while waiting for action from the SEC and Congress.
Interestingly, it’s not just Bitcoin and Ethereum experiencing upward movement based on the speculation surrounding ETFs. All major cryptocurrencies are increasing in value as investors anticipate a flood of crypto ETF products in the future.
Growth on the Blockchain
Despite the decline in crypto prices in recent years, the industry continues to evolve, with businesses and developers working on meaningful projects on blockchains. Companies like Visa, Shopify, and MercadoLibre are testing the use of blockchains for completing payments, and numerous other projects are underway globally.
While this activity will drive value to cryptocurrencies and the blockchain, the current price movements are mainly driven by speculation about future value creation. It is important to monitor where developers are building on the blockchain. It’s not Bitcoin or Dogecoin that are seeing significant activity, but blockchains like Ethereum and Solana that are designed for utility and increased activity, which will ultimately benefit the industry.
Even if ETFs are approved, it is likely that the surge in value will subside, following the “buy the rumor, sell the news” pattern. Therefore, it may not be the ideal time to invest in the crypto bounce. However, it is worth staying invested as the industry matures.
Travis Hoium has positions in Ethereum and Solana. The Motley Fool has positions in and recommends Bitcoin, Ethereum, and Solana. The Motley Fool has a disclosure policy.