As of 9:45 a.m. ET, Bitcoin (BTC 1.25%), Ethereum (ETH 1.72%), and Dogecoin (DOGE 0.15%) had surged 6.6%, 9.2%, and 8%, respectively, over the last 24 hours.
These rather outsize moves reflect increasingly bullish risk-on sentiment for digital assets today. The entire crypto market had surged 8% to $2.4 trillion, as of 9:45 a.m. ET, driven mainly by moves in these three mega-cap cryptocurrencies.
Given how volatile the crypto market is, today's price action has to be taken in context. This rally comes in the wake of a few days of heavy selling, with a weekend crypto crash that saw Bitcoin hit a low of $42,875 and Ethereum hit a one-month low of $3,525.
That's not to take anything away from today's rally, which has seen Bitcoin breach the $51,000 mark and Ethereum heading toward $4,400 per token. However, sentiment in the crypto market has not been favorable for investors, who have grown accustomed to highly bullish market conditions for the past year.
Indeed, a key driver of the price performance of key cryptocurrencies such as Bitcoin, Ethereum, and Dogecoin is market sentiment. During this weekend's flash crash, overall sentiment in the crypto market dipped into "oversold" territory. A key gauge of investor sentiment noted "extreme fear" was seen in major cryptocurrencies such as Bitcoin over the past few days. Investors and traders typically view this extreme market sentiment as a good time to buy.
That makes sense. We all want to buy low and sell high. However, buying any asset that's seeing tremendous downward selling pressure isn't easy to do.
We all like to think we can buy when there's blood in the streets. However, given how volatile the crypto market is, it's understandable that some investors may have simply wanted to take a step back and wait for momentum to pick up again. Today, positive momentum has returned.
Bitcoin, Ethereum, and Dogecoin remain three of the most-watched cryptocurrencies in the market. That's not likely to change. Accordingly, these tokens are widely viewed as gauges for how various smaller alt coins will perform in the near term.
Those taking the longer view of cryptocurrencies as a multi-year investment may have been right in viewing this extreme volatility as a buying opportunity. Thus far, a buy-the-dip approach to these major tokens has worked out. That can certainly change; however, for now, investors appear to be doing just that today.