The crypto industry is on the rise again and three of the largest cryptocurrencies are leading the way. Starting Friday at 2 p.m. ET, Bitcoin (BTC 2.28%) rose 3% from Thursday’s close. ether (ETH -0.46%) rose by 4% and Dogecoin (DOGE 3.65%) rose by 5.3%.
Cryptocurrencies have been volatile over the past year, but have seen higher prices since mid-October.
Behind the rise of cryptocurrencies
The biggest news related to Crypto Friday is this BlackRock (BLK 2.02%) is pursuing an Ethereum exchange-traded fund (ETF) and trying to get permission to launch a Bitcoin ETF. There are already ways for investors to buy cryptocurrencies on traditional exchanges, but these are not as efficient as ETFs, which is why BlackRock and others are trying to get ETFs approved.
In theory, more options for investing in cryptocurrencies will result in more money flowing into tokens, which will drive up prices. For this reason, traders shy away from any ETF approval and may offer higher values.
The obstacle currently preventing such ETFs from entering the market is the Securities and Exchange Commission (SEC), which has neither approved crypto ETFs nor established rules for cryptocurrencies in general. That has left the industry in limbo, and Congress also has yet to agree on a regulatory framework for crypto. Because of BlackRock’s involvement, many investors are speculating that ETFs could be the only way to bring crypto more into the mainstream while the SEC and Congress wait for action.
The interesting thing is that Bitcoin and Ethereum ETF speculation isn’t just Bitcoin and Ethereum on the rise – all major cryptocurrencies are surging as investors anticipate a flood of crypto ETF products to emerge at some point.
Growth on the blockchain
Despite the decline in crypto prices in recent years, the industry continues to evolve and companies and developers are developing more and more significant projects on blockchains. Visas is testing the use of blockchains to process payments, and that’s what they’re doing Shopify And Free market. There are dozens, if not hundreds, of other projects underway at companies around the world.
This is the type of activity that will increase the value of cryptocurrencies and the blockchain, but investors are currently only speculating about possible future value creation. I tend to think there will be value, but recent developments don’t necessarily suggest long-term value.
What I would pay attention to is where developers are building on the blockchain. It’s not Bitcoin or Dogecoin that are becoming active – it’s blockchains like Ethereum and Solana which are designed for utility and more activity that will ultimately be beneficial.
I also expect the jump in value to fade even if ETFs are approved, based on the “buy the rumor, sell the news” pattern. For this reason, I am not participating in the cryptocurrency upswing at this time. But I will continue as this industry matures.
Travis Hoium has positions in Ethereum and Solana. The Motley Fool has positions in and recommends Bitcoin, Ethereum, and Solana. The Motley Fool has a disclosure policy.
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