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Why Bitcoin Cash, Kaspa and Stacks Rise Today
Sentiment in the cryptocurrency world appears to be cooling this afternoon, after a rather hot morning of trading, in which most major tokens saw impressive gains. Starting at 3:15 pm ET, Bitcoin Cash (CRYPTO: BCH) e Kaspa (CRYPTO:KAS) remain two of the biggest winners, up 6.7% and 12.8% respectively over the past 24 hours. In the same period of time, Stacks (CRYPTO:STX) is up 1.6%, but rose more than 8% to its intraday high.
Interestingly, these three altcoins have continued to move with relatively high correlation compared to other risky assets, such as the high-growth technology stocks represented in the Nasdaq composite. This morning’s surge has sparked some selling pressure this afternoon, with investors of all stripes appearing to be taking a breather (and perhaps some profits) after a very hot start to this year.
Of course, the macro picture will likely continue to drive intraday directional movements and investors will want to pay close attention to such factors. However, these three tokens also have their own unique catalysts that are worth diving into. So, let’s do just that.
Why are these three tokens rising today?
Sticking to the macroeconomic picture for a second, capital flows there Bitcoin have permeated into other areas of the cryptocurrency market. Bitcoin Cash is a notable and obvious beneficiary of this move, as investors seek exposure to cryptocurrencies with transaction-based business models. Interestingly, an announcement from Global Coinbase yesterday that the largest centralized exchange in the US will offer futures trading for Bitcoin Cash and two other tokens on April 1st sent this token soaring. Expectations are that traders will look to trade Bitcoin Cash via these future contracts, increasing trade liquidity (and potentially spurring even larger volatility moves).
Kaspa has continued to see interest in its high-speed network grow alongside reported transaction throughput numbers. The proof-of-work blockchain company recently hit an all-time high amid increasing transaction activity on its network, and remains one of the top 40 cryptocurrencies by market capitalization that investors continue to follow closely.
Stacks’ pop and drop today is among the most intriguing moves, as it appears that the token’s initial rise today (and over the past few days for that matter) may be tied to a comment from the project’s founder, Muneeb Ali, who said that the Cryptocurrency investors are increasingly focusing on altcoins like Stacks for greater exposure to the trends this sector has to offer. And while mega-cap tokens like Bitcoin may be better bets from a store of value perspective, his view is that the more utility built on-chain, the better for all tokens. In other words, investors are once again taking into account strong ecosystem and network effects in their investment activity.
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How sustainable are these catalysts?
To some extent, the catalysts pushing these three tokens higher today carry a certain amount of risk. The Commodity Futures Trading Commission (CFTC) did not approve Coinbase’s futures offerings for Bitcoin Cash (although these products were offered through a program that allows such issuances), fundamentals can always deteriorate on any blockchain, and network effects around the world of cryptocurrencies are only as good as the influx of users into the ecosystem. In other words, if investor and user sentiment changes, these catalysts could prove moot.
That said, it’s clear that many investors are simply playing the supply and demand game in the cryptocurrency industry right now. Greater demand for these existing tokens should lead to higher prices, all else being equal (which they are not; many of these tokens are highly inflationary, but you get my point). As long as money comes in, these altcoins could see higher prices. It’s that simple and the market seems to see things that way right now.
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Chris MacDonald has no position in any of the stocks mentioned. The Motley Fool has positions and recommends Bitcoin and Coinbase Global. The Motley Fool has a disclosure policy.
Why Bitcoin Cash, Kaspa and Stacks Rise Today was originally published by The Motley Fool