Why Bitcoin, Ethereum, and Dogecoin Are Gaining Today

What happened

After a day of selling on Friday, the cryptocurrency market is posting some recovery momentum on Saturday. As of 10 a.m. ET, Bitcoin (CRYPTO: BTC) It’s up about 3.3% from the stock market’s closing bell on Friday. at the same time, Ethereum (CRYPTO: ETH) And Dogecoin‘s (CRYPTO: DOGE) The tokens rose about 6.4% and 6%, respectively, over the same period.

Cryptocurrency prices started to rise in October and continued to rise until the momentum started to fade in mid-November. The cryptocurrency market in general continued to decline in December as investors weighed the regulatory risk factors and the possibility that digital token valuations could head into a long-term bearish cycle. However, the cryptocurrency market is looking relatively calm at the moment.

Image source: Getty Images.

so what

Bitcoin reached a lifetime high of $68,990.90 per token last month, but the token fell below $50,000 per tick in early December trading and is now trading at around $46,300 per coin. The cryptocurrency is down about 23% over the past month and about 33% from its all-time high.

Bitcoin has posted a solid performance this year and remains the largest cryptocurrency by far, but there are signs that the market is shifting towards a different class of token. While Bitcoin can be used as a currency or a speculative investment vehicle, most of the excitement in the market seems to revolve around tokens connected to blockchain networks and applications focused on service and development.

In terms of dollars, Ethereum has been the leading cryptocurrency market leader in app-backed cryptocurrencies. The price of the network’s ether token has soared amid a growing adoption of the network’s smart contract and app-building features, and some investors and analysts see this momentum as leading to “volatility” — the moment when Ethereum’s market cap exceeds bitcoin. Ether’s loss of just 8% over the past month from the bearish crypto momentum indicates that the token is gaining traction relative to Bitcoin.

Meanwhile, Dogecoin is down about 29% over the past month and about 75% from its all-time high. The price of the Dogecoin token peaked at around $0.69 in May, but it quickly lost ground as investors took profits in the wake of the explosive gains. The token struggled to regain its strength as investors generally became more risk-averse and attention turned to other tokens.

What now

Even with the massive price swings, 2021 was a year of great returns for the broader cryptocurrency market.

Bitcoin price chart

Bitcoin price data by YCharts

Despite lagging other cryptocurrencies with stronger gains this year, Bitcoin managed to post solid gains across 2021 trading, and remains the number one cryptocurrency. The market capitalization of the token is currently around $892 billion, while the Ethereum token has a market capitalization of around $472 billion. Dogecoin’s impressive gains helped it reach a market cap of $23 billion, and it currently ranks as the 11th largest cryptocurrency.

As we head into the end of 2021, investors are trying to analyze how to balance risks and find emerging opportunities through digital tokens and blockchain-based projects. While it is generally believed that Federal Reserve policy, government stimulus, and other economic factors have a much greater impact on stock and real estate prices, these factors appear to have a significant impact on the cryptocurrency market.

Just as the ability to obtain low-interest loans has been touted to drive up stock prices, it has also likely played an important role in the strong bull market phase of the cryptocurrency market over the past year. With the Federal Reserve likely to raise interest rates three times next year and ease stimulus spending, cryptocurrency valuations will likely face downward pressure if investors in general become more risk-averse. For investors looking for exposure to the cryptocurrency space, selling can present worthwhile buying opportunities, but the dollar cost averaging may be less risky than making large investments all at once.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of the Motley Fool Premium Consulting Service. We are diverse! Asking about an investment thesis — even if it’s our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.