Huge buying activity boosting Bitcoin, Cardano and Polkadot today
What happened
The shift in sentiment we’ve seen play out among major cryptocurrencies looks set to continue this week. Today, Bitcoin (BTC -0.51%), Cardano (ADA -1.16%)and Polka dot (DOT -1.21%) each moved higher to start the week, based on gains these tokens have seen since bottoming out in mid-June. As of 2:00 PM ET, Bitcoin, Cardano, and Polkadot have appreciated 3.5%, 4.9%, and 6.8%, respectively, over the past 24 hours.
Bitcoin actually rallied more aggressively this morning, breaching the $25,000 mark for the first time since June. Broader market sentiment, which has shifted in a bullish direction as investors focus on catalysts such as Ethereum‘s upcoming The Merge over headwinds related to insolvencies and structural issues in this space seems to be the key factor Bitcoin investors care about right now.
Cardano has seen continued interest, as this network nears its own key update: the Vasil hard fork. Founder Charles Hoskinson has reiterated that this upgrade is unlikely to be delayed further, noting no significant issues with testing so far.
That said, Polkadot’s rise today is quite exciting to consider, as a Polkadot-backed stablecoin, the acala dollar (aUSD), was recently hacked and lost 99% of its value. As with many ecosystem-driven crypto projects, investors seem to be paying less attention to these headlines, choosing to focus on Polkadot’s ties to Ethereum in this market rally.
So what
It is truly amazing to see the extent to which market sentiment has changed in the crypto sector. Tokens like Polkadot that face a hack, or tokens like Cardano that delay their upgrades, are not put in the penalty box by investors. There is risk again, with both speculators, traders and investors jumping on board.
The multi-week nature of this crypto market rally has some investors believing the bottom may be in. Whether this buying activity can be sustained in the face of future interest rate increases and the potential for more macro headwinds is still unclear. However, this is the most exuberant market to emerge since last year, to be sure.
What now
We are in an interesting period, where most investors have become self-proclaimed economists. As the Federal Reserve has accelerated its rate hike plan, various risky asset classes (such as crypto) have been hit hard during the first half of this year. But given a lag between the Fed’s last rate decision (July 27) and its next decision (September 21), there is a time frame in which investors can ignore the rate hike and buy the decline.
That said, through the end of the year, more headwinds could materialize if the Fed doesn’t stop raising interest rates, as most in the market expect. This could be a Goldilocks period, producing a significant bear market rally.
Alternatively, this rally could continue if expectations prove correct. And should the major upgrades in store for Ethereum and Cardano prove fruitful, perhaps this rally is just the beginning. Time will tell.
