Ethereum
Bitcoin’s latest all-time high drives Ethereum and Dogecoin higher today
Bitcoin’s streak of generating new all-time highs may not be over, leading to growing interest in other key digital assets.
It’s a hot new start to what’s shaping up to be another big week in the cryptocurrency world. Major cryptos are booming again, with Bitcoin (BTC -1.46%), Ethereum (ETH -2.44%), and Dogecoin (DOGE -5.38%) all making big moves.
As of 12:15 p.m. ET on Monday, these three mega-cap cryptocurrencies had jumped 3.8%, 2.9%, and 0.9%, respectively, over the previous 24 hours. Importantly, Bitcoin hit a new all-time high above $72,500. Following the Securities and Exchange Commission’s recent approval of several spot Bitcoin exchange-traded funds (ETFs), continued capital inflows into these funds are creating a clear imbalance between supply and demand for this premier crypto. plan. This catalyst, along with anticipation of the upcoming halving event in April – which will halve rewards for Bitcoin mining and thus reduce the volume of new Bitcoins created – exacerbates expectations that recent momentum of Bitcoin can continue.
Most investors who follow crypto can understand the rather simple dynamic that drives Bitcoin higher. But for more complex reasons, Bitcoin’s recent rise could also mean continued upside for Ethereum and Dogecoin, two projects that are very different from Bitcoin in key ways.
Why is the Bitcoin movement an industry-wide phenomenon?
There is certainly something to be said for Bitcoin’s status as a key cryptographic benchmark against which other digital assets are evaluated. The Bitcoin/US dollar exchange rate is very important in the crypto world, with Bitcoin widely considered the currency of choice for this sector. This should mean that as Bitcoin gains value, other tokens relative to Bitcoin should become relatively cheaper, at least relative to Bitcoin.
However, in previous rallies this has not been the case. And while capital is clearly flowing in one direction (towards Bitcoin via these exchange-traded funds), it is also true that retail investors and even some large fund managers are finding ways to accumulate other cryptocurrencies before this as many expect a continued rally. risky assets.
For Ethereum in particular, the possibility that an Ethereum spot ETF could be approved as soon as May is a key catalyst that many investors are watching. The Ethereum network is also undertaking a number of upgrades, including the upcoming Dencun upgrade, which is expected to happen in two days. As investors may recall, the “merge” upgrade created significant hype for this network as Ethereum moved from a proof-of-work protocol to a proof-of-stake protocol, more energy-hungry. The Dencun upgrade will seek to build on this progress, with a focus on reducing Layer 2 transaction costs and improving network efficiency.
For meme tokens like Dogecoin, it’s party time, mainly due to the risk-off atmosphere that has developed in certain pockets of the market. Cryptocurrencies like Dogecoin, which rely more on the value of their community and backers, have attracted outsized interest due to the surge in asset prices in this sector. For now, the thesis supporting Dogecoin’s rise may be as simple as “the price is rising”, but it is also true that leveraged bets on the upside via long perpetual contracts play into the rise in price. power of Dogecoin in recent days.
How long will this party last?
Until we see some sort of slowdown in the flow of capital into Bitcoin, it seems increasingly unlikely that we will see the kind of significant pullback that many cryptocurrencies are predicting. Spot Bitcoin ETFs have siphoned off an incredible amount of capital from institutional investors in record time, and the level of demand has surprised even some of the most ardent crypto bulls. While Ethereum and other digital assets may experience similar waves of investment, all bets are off on how long this period of price appreciation will last.
Upgrades and other utility-generating use cases for a wide range of cryptocurrencies (and some meme tokens may be included in this group) could also fuel the fundamental investment thesis behind these digital assets. While I’m less enthusiastic about Dogecoin’s long-term prospects compared to Bitcoin and Ethereum, its recent move is worth noting. In the crypto sector, speculative interest can manifest itself in significant short-term volatility, as we have seen in the past. As a result, these are three tokens that any investor interested in the crypto space will want to look at in the future.