Cryptocurrencies had a positive weekend and are continuing to perform well on Monday. Last week’s economic news encouraged investors to take on more risk, resulting in an increase in the value of cryptocurrencies.
The biggest movers in the market were Ethereum (ETH), Dogecoin (DOGE), and Shiba Inu (SHIB). Ethereum saw a rise of 5.4% between Friday’s close and Monday afternoon, and Dogecoin experienced a more significant increase of 10.2%. Shiba Inu reached its highest point at a 7.1% increase.
The positive economic data from last week, including the Federal Reserve’s decision to pause rate hikes, contributed to the overall market growth, including cryptocurrencies. The speculation that interest rates will remain low throughout the year due to a weaker-than-expected jobs report has also been driving values higher. Lower interest rates are currently seen as bullish for riskier assets like stocks and cryptocurrencies.
Furthermore, there is ongoing speculation about the approval of more crypto ETFs, which has been generating strong trading momentum. The SEC is considering multiple Bitcoin ETFs, and if approved, this could lead to an influx of funds into the crypto industry. BlackRock, with its $9 trillion in assets under management, is one of the institutions applying for a spot ETF, and its approval could have a significant impact on the industry.
While the approval of a Bitcoin ETF could potentially benefit tokens like Ethereum, Dogecoin, and Shiba Inu, it is uncertain if these tokens would eventually receive spot ETFs as well.
It is important to note that the current value of cryptocurrencies is largely driven by speculation. There has been no significant increase in utility or real-world use cases for blockchain and tokens like Dogecoin and Shiba Inu. Investors are mainly bidding up the digital assets based on the actions of the Federal Reserve and expectations of what the SEC might do.
If these speculations turn out to be false, there is a possibility that crypto values could crash again. It would be beneficial to see more real-world utility being built into the blockchain and tokens to solidify their value. Ethereum has the potential to be a valuable blockchain, but it faces challenges such as high costs and slow transactions. Upgrades are expected to address these issues, but it will take time for them to be implemented.
In conclusion, the current market for cryptocurrencies is driven by speculation, and until there is increased utility and real-world use cases, these assets remain speculative. It is important to consider the risks associated with investing in cryptocurrencies.
Author: Travis Hoium
Disclaimer: Travis Hoium has positions in Ethereum. The Motley Fool has positions in and recommends Bitcoin and Ethereum. Please refer to The Motley Fool’s disclosure policy for more information.