The ups and downs of the cryptocurrency market continued again on Friday but this time the news was somewhat positive. After falling for most of the week, crypto prices have trended higher starting late Thursday night and into Friday morning.
As of 11 a.m. ET on Friday, Bitcoin (BTC 0.17%) was trading at $58,089, up 4.4% from its low on Thursday but down 0.9% in the last 24 hours. Zooming out, Bitcoin is down 10.4% over the past week, so the trend was definitely lower this week.
Cryptocurrencies are having another volatile day on Friday but this time after a week of falling prices, most cryptocurrencies are moving to the upside.
Ethereum (ETH) is trading 4.1% higher today to $4,225 and is up 6.7% from its lows late on Thursday. Like Bitcoin, it's down 10.5% over the past week. Dogecoin (DOGE -2.03%) is up 8.8% from its low for the day and is up 5.8% in the last 24 hours. But Dogecoin is down 9.5% over the past week even after today's increase.
It's worth touching on why it's been such a bad week for cryptocurrencies. One major factor is a rising dollar and higher interest rates this week, which both work against crypto, and Bitcoin specifically, as a hedge against inflation. If the dollar is rising and rates are rising, what inflation is there to fight?
We have also seen a multi-month rally in cryptocurrencies, which may be causing some investors to take some profits right now. But eventually some investors will see the sell-off as overdone.
On the plus side, investors may be a little more bullish on crypto after a bill was introduced in Congress to undo some of the reporting requirements built into the recent infrastructure bill. The Keep Innovation in America Act is a bipartisan bill that hopes to fix some of those digital asset reporting requirements that could make it harder for the crypto industry to grow. Specifically, miners, developers, and individual users would be excluded from the broker rules that many think will be onerous on the industry.
The market continues to be extremely volatile and it's not clear where cryptocurrency values will ultimately land. But the frenzy that pushed the crypto market higher seems to have lost its legs and it's not just crypto that's falling right now.
Growth stocks are also trading lower as interest rates rise and investors wonder whether there's a bubble that will pop highly valued markets. Even fear of a bubble can cause volatility like this week.
As always, cryptocurrency investors should understand that volatility is a normal part of the market. In the last half day the trend seems to be higher, but going into the weekend the trend could turn just as quickly as it came.