The crypto market came to life over the weekend, and some of the better-known tokens in the world are moving sharply higher since the market closed on Friday. Bitcoin (BTC 3.49%) is up 4.7% from the close on Friday and was up as much as 5.8% over the weekend. Zoom out even further and Bitcoin is up 16.2% over the past week as of 3 p.m. ET.
Stacks (STX 6.93%) was up 12.8% since Friday’s close, Chainlink (LINK 1.80%) is up 14%, and Optimism (OP 7.64%) has gained 13.7%. Altcoins have surged on continued speculation that altcoin exchange-traded funds (ETFs) are the next wave of crypto investments to open up.
Bitcoins big rally
There are a couple of catalysts for Bitcoin recently. One is recent weak earnings from commercial banks that have shown continued signs of weakness in the commercial real estate market. This isn’t a surprise to anyone watching commercial real estate and the turmoil happening there, but if there are any bank collapses, we could see investors put assets into assets like Bitcoin that wouldn’t be subject to a bank run.
The halving of Bitcoin is also expected to happen in about two months, which many investors feel is a bullish sign. Previous halving events have led to Bitcoin rising in value, so it’s possible that happens again.
We have also seen inflows into Bitcoin after the approval of Bitcoin ETFs. Some investors may not be happy with the pace of money flowing into ETFs, but if inflows continue at a pace of around $9.5 billion per month, it’s possible that slowly pushes the price of Bitcoin higher.
The simple reason altcoins like Stacks, Chainlink, and Optimism are up today is because there’s optimism the Securities and Exchange Commission (SEC) will eventually allow ETFs based on these altcoins. The regulatory agency has put itself in a position where it will likely need to clarify what is and isn’t a security in the crypto market, and anything not deemed a security will likely get an ETF, just like Bitcoin.
That’s caused a flow of funds into the altcoin market recently.
Follow the money
You’ll notice that none of these moves were driven by great fundamentals or a big change in the blockchain or utility for these tokens. Instead, tokens are currently moving based on sentiment and where the money is moving.
This isn’t unusual for the crypto market, but it should cause a bit of caution among investors who saw these kinds of moves late in 2022 when the crypto market peaked. Higher-risk assets like tech stocks and high-growth stocks are moving higher and trading for extremely high multiples, and that again has correlated to higher crypto prices.
Speculative moves like this don’t always last, but the growth in ETFs is a sign of wider adoption that could keep the crypto market moving higher long term.
Travis Hoium has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin and Chainlink. The Motley Fool has a disclosure policy.