What happened
Today’s price action in the crypto market is notable, in that the direction of this move is to the upside. Crypto investors haven’t seen a lot of green lately, making today’s 3.2% increase over the past 24 hours for the overall market a pleasant turn in the right direction.
This move has been driven by significant outperformance from large-cap cryptocurrencies Bitcoin (BTC -2.78%), Solana (SOL -4.38%), and Avalanche (AVAX -4.32%) today. As of 9:30 a.m. ET, these top tokens have appreciated 2.3%, 3.2%, and 6.5%, respectively, over the past 24 hours.
As it happens, there are unique catalysts taking each of these tokens higher today.
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Bitcoin’s move higher today appears to be driven by a weaker U.S. dollar, as well as a flight to relative stability in the crypto sector. Solana and Avalanche have both seen interest as Ethereum alternatives, with investors seemingly more interested in diversification amid a rather harsh bear market for this asset class.
For Avalanche, this move higher is a welcome sight, considering the terrible performance this token has seen over the past week, as investors ponder whether the Luna Foundation Guard and Terraform Labs, the parent company of Terra (LUNA -24.78%), will sell its Avalanche holdings.
So what
Generally speaking, the strength of the U.S. dollar is a factor that hasn’t been discussed much, relative to the underperformance of the crypto sector of late. The U.S. dollar has surged on higher interest rates, as global investors flee to safe-haven assets amid this sell-off. For cryptocurrency prices, much like the prices of other commodities denominated or exchanged with dollars, this has been a key headwind. Recent declines in the U.S. dollar over the past week have bolstered the price of many asset classes, including digital tokens.
There’s still greater stress on the overall crypto market than other markets due to the recent collapse of algorithmic stablecoin UST and the overall Terra ecosystem. Avalanche’s recent price weakness is indicative of investor concern, particularly due to the fact that Avalanche was a token bought as reserves for this stablecoin ecosystem. How this proceeds from here remains uncertain; however, investors appear to be taking the view today that the recent sell-off these three tokens have seen may have been overdone.
Now what
It’s difficult to say whether the crypto market is in full-on recovery mode. After all, bear market bounces are commonplace, and no one really knows where the bottom is. If investors continue to de-risk their portfolios, crypto holdings may be the first to be shed by retail and institutional investors alike.
That said, the rally that has unfolded over the past two days is encouraging. Perhaps there’s some bottom forming that can provide investors with a great near-term entry point. Whether its “the” bottom or not will be determined by time.
Bitcoin, Solana, and Avalanche are three of the highest-quality blockchain networks in existence. Accordingly, for investors looking to buy this dip, it’s reasonable to expect these tokens to hold up well over the long term, despite what is likely to be more near-term volatility.
This news is republished from another source.
