The crypto winter is thawing, and some of the biggest tokens on the market have come to life in just the past week. There wasn’t any major news out from the industry, but there seems to be a very big mood shift happening across crypto.
According to data provided by S&P Global Market Intelligence, Bitcoin (BTC 2.26%) is up 13.6%, Ethereum (ETH -0.20%) has gained 12.8%, and Dogecoin (DOGE 6.37%) has popped 20.2% over the past seven days. And there doesn’t seem to be any end in sight to the momentum.
Is the crypto winter over?
There have been a number of catalysts for the crypto market lately. The bullish move in the stock market has been a very “risk-on” move which has typically translated to cryptocurrencies moving higher as well.
Airdrops, or giving away tokens to wallets on the blockchain, have also added hundreds of millions of dollars in liquidity to the market, and that’s pushing the values of the better-known tokens higher.
Crypto can be a very sentiment-driven market, and traders are seeing a lot of reasons to be bullish right now with institutions and individuals pouring money into crypto after nearly two years of money flowing out of the industry. On top of that, interest rates are falling and growth investors are getting more bullish, which correlated with the rise in crypto in 2021.
More work ahead
For the momentum to continue, crypto needs to develop more use cases and ways to generate value than just trading. That’s being done in a lot of areas including payments and decentralized financial products. But many tokens and airdrops are simply riding the hype cycle without knowing where long-term value is going to come from.
I think the current state of crypto looks a lot like the fear of missing out and “you only live once” trading that happened during the pandemic. But this time around the market is much more well known, and bigger institutions are starting to get involved.
What investors should be wary of is the market crashing again if the economy slows down and interest rates don’t come down as fast as expected. This crypto rally isn’t necessarily built on a solid footing of improving regulations and improved use cases; it’s more about speculation.
While I’m bullish on the future of the blockchain, I don’t think these moves in some cryptocurrencies are sustainable. Many tokens have little use other than trading, and their long-term prospects ultimately may end in values falling and investors losing their money. There are more established tokens like Bitcoin and Ethereum that have proven to be stores of value or a place where there’s development, but I wouldn’t take the rise in altcoins as a sustainable jump. After a great week and an even better month, it may be time to take some gains in crypto.
This news is republished from another source.
