What happened
Mega-cap cryptocurrencies Bitcoin (BTC -2.11%), Ethereum (ETH -0.72%), and Solana (SOL -5.42%) each skyrocketed higher in early afternoon trading today. As of 1:30 p.m. ET, these three top tokens appreciated 9.8%, 12.8%, and 11.6%, respectively, over the past 24 hours.
All three initially dipped this morning following a bullish jobs report. However, since then, the crypto market has followed equities higher in early afternoon trading, surging on extreme interest from investors, despite heightened risks of rate hikes and more hawkish monetary policy.
Image source: Getty Images.
As far as token-specific news goes, Bitcoin got a bump today from a report that showed that Bitcoin miner Marathon Digital has increased its January production more than 800% and now holds nearly 8,600 BTC on its balance sheet. Solana's launch of Solana Pay and the listing of two Solana-based tokens on Coinbase earlier this week continues to provide this token with strong tailwinds. And Ethereum is seeing increased interest, due to recent numbers showing the proliferation of non-fungible tokens (NFTs). Ethereum is the main blockchain network upon which most NFTs function.
So what
As we've seen in recent weeks, the crypto market is moving in high correlation to risk equities, particularly stocks represented in the tech-heavy Nasdaq.
As is usually the case with the crypto sector, these incredible moves we're seeing today reflect the extremely volatile nature of digital currencies. Investors in cryptocurrencies such as Bitcoin, Ethereum, and Solana may expect more muted price action than with other, smaller altcoins. However, the price action we're seeing among mega-cap stocks, with Amazon up double digits today following earnings, for example, indicates that investors are overreacting and underreacting to news in a big way.
Overall, all three tokens appear to have catalysts that investors have been waiting to price in for some time. Given the rather weak macro environment, extremely bearish sentiment has overshadowed these catalysts. Today, investors appear to be taking a risk-on view of higher-risk assets such as crypto, as indicated by these moves.
Now what
It's hard to say if these sorts of double-digit percentage increases will be sustainable over the near term. Indeed, there are a significant number of headwinds that cryptocurrencies and other risk assets are battling right now.
However, the inclination to buy the dip doesn't appear to have dissipated quite yet. Investors looking for top-tier cryptocurrencies to add right now are focusing on these top tokens as potential long-term winners.
