Crypto Surges: Is Now the Time to Buy Bitcoin, Ethereum and Cronos?
What happened
The incredibly unpredictable price action seen in the cryptocurrency sector is once again in full focus today. Overall, the crypto market has moved meaningfully in tact today, with the overall market rising a little more than 1.5% over the past 24 hours, from 1:45 p.m. ET.
That being said, megacap tokens Bitcoin (BTC -1.58%), Ethereum (ETH -1.82%)and Cronos (CRO -2.00%) remain the focus of most investors, given the size and importance of these important blockchain projects. Starting at. As of 1:45 PM ET, these three tokens were up 1.8%, 2.8%, and 4.4%, respectively, over the past 24 hours.
Interestingly, Bitcoin’s move (which was the smallest of the three) follows an 85-minute window on Monday in which no blocks were produced. A difficulty adjustment appears to be tied to this issue, which raised eyebrows in the crypto world.
Other top tokens like Ethereum and Cronos have their own individual catalysts and headwinds. This week it became known that XRP begins testing a sidechain compatible with Ethereum’s smart contracts. And Cronos has benefited from recent gaming-related updates, which have investors intrigued by this blockchain project’s growth potential.
That said, the potential for further rate hikes from the Federal Reserve continues to provide headwinds for all risk assets. This makes the price action in these top tokens even more difficult to understand.
So what
There are some very fuzzy thoughts that seem to be gripping the markets right now. Given last week’s warmer than expected CPI and PPI prints, most investors initially thought this would lead to more rate hikes, which is bad for risk assets. Cryptos, stocks and bonds were sold immediately on the news.
However, recent days have seen some bullish momentum return, as some appear to be of the view that more rate hikes in the short term could lead to a recession in the medium term. Such a recession could lead to lower interest rates sooner than expected.
This second-derivative sentiment appears to be at play again today, with the majority of short-term catalysts still appearing to represent net negatives for crypto.
What now
The difficulty of predicting monetary policy decisions remains extremely high, and with most experts unable to see the inflation we are currently battling, one could argue that any kind of forward-looking forecast is likely to be wrong. Such is the nature of forecasts.
That said, the idea that we could end up with lower interest rates in the medium term as the Federal Reserve breaks something is one that is starting to gain momentum. For risky assets like crypto, returning cheap(er) capital to the system could be the catalyst to drive valuations even higher. We’ll have to see what happens in the months and quarters to come, but suffice to say, there’s a lot for investors to digest right now.
