As of 1:00 p.m. ET, Bitcoin, Ethereum and Cardano gained 3.3%, 1.2% and 4.8%, respectively. The day before, Ethereum posted a 24-hour gain of 3.8%. Those modest upward moves corresponded with reasonably solid momentum this end of the week, just after an early Saturday auction held yesterday in the cryptocurrency market. Digital money investors are well-placed to pursue a thoughtful strategy for these large cap cryptocurrencies after a rough week ended for these major tokens.
so what
Bitcoin, Ethereum and Cardano together make up about 65% of the cryptocurrency market. These blockchain networks are behind the vast majority of real world use cases in the world of cryptocurrencies. Accordingly, investors often view these top 6 tokens as editorials for which direction the wind is blowing in the cryptocurrency universe.
Each of these three tokens began on Wednesday after a congressional meeting between key cryptocurrency CEOs and lawmakers to discuss the potential for regulation in the cryptocurrency market earlier this week.
This week’s choppy price action suggests that investors are increasingly concerned about the regulatory outlook for the cryptocurrency market emerging in the future. Capital inflows into the cryptocurrency market can be hampered by tighter regulation, with tax concerns related to Biden’s spending accounting already headwinds for the sector.
There is therefore concern that any kind of appeasement effort by major cryptocurrency players could undermine the investment thesis for this entire sector, which would be particularly detrimental to large-cap tokens such as Bitcoin, Ethereum and Cardano.
Additionally, early enthusiasts jumped into the cryptocurrency market based on the idea that the government can’t touch this asset class. The privacy and anonymity of the major cryptocurrencies are some of the main reasons investors got on board. The lack of connection to the government, supervisory authorities or other large financial institutions also plays an important role in their investment theses.
What now
Based on the initial conversations between prominent cryptocurrency figures and regulators, it appears that the market is pricing in a certain likelihood of broad regulation in the cryptocurrency space. This headwind can be difficult to price for investors, leading to some short-term volatility in the price of these important tokens.
This weekend, it seems like these three main traits are starting to take hold. In the past there were many peaks and valleys. And maybe this is just the latest volatile swing on a march to new all-time highs.
However, the risks associated with cryptocurrency investments remain much higher than most asset classes. Accordingly, the wait-and-see approach the market is currently taking with these top tokens may be justified. This article represents the opinion of the author who may disagree with the “official” referral position of a premium advisory service from the Motley Fool. We are colorful! Questioning an investment thesis – including one of our own – helps us all think critically about investing and make decisions that will help us get smarter, happier, and richer.
Summary of the news:
- Bitcoin, Ethereum and Cardano continue to bounce back from the weekend sell-offs
- Check out all the news and articles on the latest business news.
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