What happened
The value of cryptocurrencies jumped on Thursday starting when the Federal Reserve said it would start to "taper," or reduce, bond buying in 2022 and likely allow interest rates to rise in order to combat inflation. The market has worried for months that the economy was getting too hot, which could lead to inflation, but the central bank is moving to ease those fears.
Most cryptocurrencies rose, but in the altcoin space there were some notable moves. Avalanche (AVAX +0.75%) jumped as much as 10.8% over the last 24 hours, Fantom (FTM +4.44%) popped 12.4%, and Polygon (MATIC +0.00%) was up as much as 7.6%. The cryptocurrencies are up 3.4%, 2.6%, and 3.7% as of 2:40 p.m. ET.
Image source: Getty Images.
So what
The Fed's move is the tide lifting all cryptocurrencies, but there were some notable news items out of these coins today. Bank of America said in a research note that Avalanche's smart contract platform could be a credible alternative to Ethereum while also being secure and decentralized.
Fantom announced it has added DIA's open source oracles, or integrations with data from the outside world (like weather or sports scores), into the blockchain. This data can then be used by developers to build products. This is another example of the ecosystem improving in the crypto economy.
Polygon has launched a Layer 2 token swap service, which has been added to its native wallet. This will allow users to swap tokens within the wallet instead of doing it on a decentralized exchange. As users collect more tokens, making transfers easy will be a great value-add for wallet operators.
Now what
These may not sound like earth-shattering announcements, but building the crypto ecosystem is key for the long-term viability of these projects. We will often see the value of specific cryptocurrencies bounce when new investments or upgrades are announced.
The key to keeping values high is attracting developers and users to each of these crypto economies. And there's hundreds of millions of dollars going into these projects right now. While I like the upgrades all three cryptocurrencies are making, it's likely not all of them will win, so a basket approach to altcoins is wise for investors.
Volatility will also likely continue as investors seem to change their mind daily about the direction of cryptocurrencies. Right now, the trend is higher, but the last few weeks hasn't been kind for the industry. One thing that's likely is that volatility will continue, but if utility continues to be added to these crypto ecosystems it's a good sign for the industry long-term.
