Crypto winter suddenly thawed late Friday night as industry-wide tokens surged. We’ve highlighted some of the major cryptocurrencies that have moved before, but some well-known altcoins are also popping.
Polka dot (Dot 9.17%) As of 5pm ET, it is up 15.7% over the past 24 hours. NEAR protocol (shortly 15.08%) increased by 21.1% and paper (XTZ 7.58%) It also jumped 13.4%.
In recent cryptocurrency trading, the macro market environment cannot be overlooked. This week’s inflation data showed that US prices actually fell month-on-month in December, and investors believe rate hikes may end sooner than expected. Stock prices rose, and so did risky assets such as cryptocurrencies.
On a more substantive level, the U.S. House of Representatives announced a subcommittee on digital assets, financial technology, and inclusion under the House Financial Services Committee. Lawmakers have been talking about regulating cryptocurrencies in a more meaningful way.
Signs of regulation have been cheered by crypto traders over the past year, but without much effect. Altcoins like Polkadot, NEAT, and Tezos have blockchains that are fundamentally built to build utility, and with more regulatory certainty, I think they’re going to take a big place.
From a trading perspective, cryptocurrencies are in a relatively low-volume environment, meaning there is not much liquidity (buyers and sellers). When the price started to rise, it shocked the market and triggered a runaway that led to the liquidation of short positions. In the last 24 hours alone, major tokens and altcoins have seen him liquidate $624 million. This short squeeze is like fuel for a cryptocurrency rally.
Cryptocurrencies remain highly volatile and risky, but developers continue to build real utility around blockchain. It should be, but that doesn’t mean the ride will be smoother.
I think the last day of pop was driven by the recovery of sentiment after the FTX collapse. When FTX went bankrupt, it was clear that billions of dollars in assets needed to be liquidated or sold, which would drive crypto prices lower. $5 billion in cash and cryptocurrencies were reportedly recovered, some of which was due to the sale of leveraged positions.
Market uptrends could continue and could wane, but there seems to be a shift in sentiment in both stock markets and cryptocurrencies. It is clear that the leverage of But even if the future looks bright, it will be a precarious road.
Travis Hoium has no positions in any of the mentioned stocks. The Motley Fool has no positions in any of the companies mentioned. The Motley Fool’s U.S. headquarters has a disclosure policy.