Why altcoins are rising again this week

Will altcoin prices follow gravity? With prices’ long-term rally extending further this week, investors could be forgiven for thinking they’ll continue to launch rockets into space. Not all altcoins have enjoyed such rocket rides, but some have seen their prices skyrocket.

For example, according to data collected by S&P Global Market Intelligence: BNB It recorded a double-digit increase of 16% during the period. The same goes for multiverse digital currencies. MultiverseX and transaction bundling chain optimismThe tokens all developed at the same rate. It recorded an almost double-digit increase. theta networkThere was an increase of almost 10%.

Strategy shift and MicroStrategy’s major purchase

There are many factors that have contributed to the continued rise of altcoins, but perhaps the most important factor is redistribution. Data analyzed by Coinalyze, a cryptocurrency trading analytics platform developer, from January 2022 to present shows a sharp increase in altcoins’ open interest (the number of trades that have not yet been closed), making them the original and most popular crypto. For currency, it has decreased. , Bitcoin (BTC -1.05%).

Accordingly, the price of Bitcoin rose slightly in the middle of the week. One of the most prominent bulls on coins, MicroStrategy (MSTR -5.43%) Co-founder and Chairman of the Board Michael Saylor announced that his company has made the latest in a series of large Bitcoin investments. This amounted to nearly $616 million, enough spending to raise the prices of almost all of its assets.

As is often the case when assets are hit by sudden and significant events, Saylor’s news was at an unsustainable high. As a result, investors took profits and the Bitcoin price subsequently fell. This made altcoins more attractive to many investors and the upward trend continued.

Of course, no cryptocurrency will become popular if the macroeconomic environment is unfavorable. Looking at the recently announced inflation figures not only from our government but also from overseas, including the UK, it appears that the price rise is subsiding. This raises the possibility of a long-awaited interest rate cut in the new year, and lower rates will cause markets to chase riskier investments such as cryptocurrencies.

Buyer beware

However, this rally currently has a fairly long tail, so investors should be cautious in the current environment. This is especially true for the more obscure and volatile altcoins, some of which anchor blockchains with little or no practical value (meme coins, anyone?). Now is the time to be careful and not be blindly greedy.