What a week it’s been for mega-cap cryptocurrencies. Three of the most popular digital assets, Bitcoin (BTC -0.77%), Ethereum (ETH -1.12%) And Dogecoin (DOGE -5.45%), each posted impressive gains. As of 12:45 p.m. ET on Friday, these top three cryptocurrencies by market cap are up 14.7%, 10.4%, and 15.4%, respectively, over the past seven days.
It should not be surprising to many investors to see Bitcoin leading the market higher, as this is the normal trend for this space. With approximately half the market capitalization of the entire crypto sector, the direction in which Bitcoin moves in a given week generally determines the performance of other digital assets.
As a result, we could see this week’s news that a Bitcoin spot exchange-traded fund (ETF) could hit the market sooner than expected due to the rising tide lifting all boats. I certainly think there is something to that.
With that said, let’s take a look at what specifically has pushed these three cryptos higher over the past week and where they could head from here.
Bitcoin ETF Launch Dominates Crypto News Cycle
It’s been a busy week in the crypto world, with the Sam Bankman-Fried trial underway, the release of various macroeconomic data impacting monetary policy decisions, and a flurry of token-specific news that was enough to make many investors think. market rotation. Of course, this week’s Bitcoin news made headlines, and for good reason.
Essentially, a number of hints that Blackrock’s spot Bitcoin ETF will finally be pushed beyond the target line materialized this week, with that ETF apparently listed in the Depository Trust & Clearing database Corporation under the symbol IBTC.
This ticker appears to have been removed and re-enabled, but the fact that we are seeing this ticker listed is apparently enough of a catalyst for crypto bulls to report it. Many believe this could be the time when Bitcoin is officially considered “open for investment” for institutional investors, in the same way that gold ETFs have made investing in precious metals much simpler and more attractive to fund managers.
On this note, I have read a number of interesting analyzes on this topic, in which many experts attempt to quantify what a spot Bitcoin ETF could mean for the digital currency in terms of capital inflows into Bitcoin and in the sector as a whole. Right now, I think most of these reports require a lot of guesswork, so I’m not sure how much credibility to give them. However, I think it is true that Bitcoin and Ethereum (assuming a spot Ethereum ETF is next, which would be 100% logical) will receive a big boost from a rush of capital into these alternative assets.
Other more speculative altcoins, such as Dogecoin, could be well-positioned to ride a wave of higher momentum. Dogecoin’s price action generally takes its cues from the directional forces created by Bitcoin and Ethereum in a given week.
Indeed, the fact that Dogecoin has moved even higher than Bitcoin and Ethereum due to overall bullish market sentiment highlights the value this token offers traders as a higher beta option in this space. A number of experts continue to point to “irrational exuberance” when discussing Dogecoin’s price action over the past few days as a key driver of this token. I tend to agree.
Where do these three tokens go from here?
It’s clear that there are good reasons for Bitcoin and Ethereum to be higher this week. As for the rest of the market, animal spirits appear to remain elevated, which is a good thing for crypto speculators banking on a new near-term catalyst-driven bull run.
That said, it remains to be seen to what extent this recovery can be sustained beyond a few days. Once a spot Bitcoin ETF is launched (and perhaps a similar Ethereum option), it’s unclear whether the bullish momentum that has driven valuations soar can continue. Indeed, it could be the last “buy the rumor, sell the news” event. We will see.
In my opinion, now might be a good time to take a cautious look at this space and wait for the dust to settle before intervening. These three tokens have certainly made good moves over the past week. Let’s just see if these gains will be sustained before we take that final step upwards.