Ethereum
Why Bitcoin, Ethereum and Dogecoin are trending up today
Bitcoin’s incredible rally to near-all-time highs is creating a rising tide that lifts all boats.
It’s been a crazy and wacky few days in the world of cryptocurrencies. Megacap tokens are experiencing continued volatility, with Bitcoin (BTC 0.76%), Ethereum (ETH -0.38%) and Dogecoin (DOGE -1.83%), still up significantly from yesterday’s close (4 p.m. ET). These three tokens are up 2.8%, 3.8% and 12.9% respectively over this period, as of 1:45 p.m. ET.
Now, these increases are significantly lower than the previous increases these tokens saw during yesterday’s session. Bitcoin, widely considered the benchmark for the entire industry, hit a multi-year high of over $63,000 per token yesterday, before giving up much of those gains. Currently, Bitcoin continues to hover around the $60,500 level, which remains significantly above the $45,000 level at which the token began the year and the sub-$20,000 level that investors saw at the end of Last year.
Today let’s take a look at what’s driving this positive price momentum among these three megacap tokens.
Capital inflows are the story to watch with these cryptos
Bitcoin’s run to its record price (nearly $69,000 per token at the end of 2021) has been remarkable. Initial interest around the largest cryptocurrency Following the Securities and Exchange Commission’s approval of spot Bitcoin ETFs, the Securities and Exchange Commission gave way to selling pressure, due to a number of factors, including FTXliquidation of assets with the aim of restoring the integrity of investors. However, a turn of events has materialized, with capital flows into spot Bitcoin ETFs increasing by more than $7 billion over the past two months as institutional investors have turned their attention to the assets digital in a way reminiscent of the previous bull market rally.
Investors betting on a supply and demand dislocation in terms of Bitcoin have been proven right, with the momentum sparking further interest in leveraged products such as perpetual contracts, which traders and speculators can use to bet on short-term increases in the price of a token. Notably, the funding rate for Bitcoin perpetual futures reached its highest level since the last bull market peak in 2021. This indicates that a lot of hot capital is being leveraged, in addition to billions of dollars of institutional capital flowing in. only to Bitcoin.
For even more speculative assets like Dogecoin, these types of trends are very bullish and are one of the main reasons we are seeing even bigger moves in meme tokens. Dogecoin’s price action has largely depended on the broader sentiment in this sector. And as Bitcoin remains the benchmark asset against which others are valued, a rising tide appears to lift all boats.
Additionally, speculation about when Ethereum spot ETFs might be introduced is growing. If the wave of capital hitting Bitcoin also flows to Ethereum, investors could benefit from big upside potential. As a result, the market is doing what it does best and ignoring these potential catalysts in advance, with Ethereum also hitting multi-year highs thanks to this sector-wide momentum.
Where do we go from here?
If many investors were asked yesterday if Bitcoin was going to hit a record high this year, the answer would likely have been a resounding yes. And given that the world’s largest cryptocurrency is now less than 15% of its all-time high, this thesis certainly has something to say. I wouldn’t be surprised if this period of consolidation we’re seeing today gives way to another rally in the coming days or weeks that takes Bitcoin and its mega-cap counterparts near, or even above, all-time highs .
Long-term investors who stuck with megacap tokens throughout the bear market period of 2022 and 2023 have been rewarded. Now the question is how much profit taking will be at current levels and whether institutional capital flows and speculative activity can be enough to push these tokens to the top. Certainly, these are three tokens that any investor should keep a close eye on right now.