What happened
The cryptocurrency market was experiencing gains today after the price of Bitcoin spiked 6.1% over the past 24 hours.
That jump helped push Polkadot (DOT +0.73%) up 6%; Crypto.com Coin (CRO +0.41%) up 10%; and Silvergate Capital (SI +13.26%), a cryptocurrency bank, up 4.4%, over the past 24 hours.
So what
Bitcoin investors may have been flocking to the digital token today after major accounting firm KPMG said that its Canadian office has added Bitcoin and Ethereum to its corporate treasury. The purchase marks the first time that KPMG has jumped into crypto assets.
Image source: Getty Images.
"This investment reflects our belief that institutional adoption of cryptoassets and blockchain technology will continue to grow and become a regular part of the asset mix," Benjie Thomas, a Canadian Managing Partner for KPMG in Canada, said in a press release.
In addition to being good news for Bitcoin and Ethereum investors, KPMG's crypto purchase adds validity to the broader cryptocurrency market. As more institutions and banks dabble in cryptocurrencies, it's causing the value of digital coins to rise.
With Bitcoin and Ethereum both jumping about 6% over the past 24 hours, Polkadot, Crypto.com Coin, and Silvergate Capital are rising as a result.
Silvergate Capital, Crypto.com Coin, and Polkadot may also be following Bitcoin higher today because of a report released by FSInsight. In the report, FSInsight said that Bitcoin's price could reach as high as $200,000 by the end of this year -- more than 4X Bitcoin's current price.
Of course, there's no way to know if Bitcoin will reach that level in 2022, or ever, but investors may have combined the positive news from KPMG and the FSInsight report today and then flocked to Bitcoin, thus pushing the rest of the crypto market higher.
Now what
While today's gains for Polkadot, Crypto.com Coin, and Silvergate Capital are no doubt a good thing, investors may want to temper some of their enthusiasm.
The crypto market has been especially volatile over the past few months as investors continue to digest news about rising inflation and as the Federal Reserve gears up to potentially raise interest rates throughout 2022. The first, of an unknown amount, of the rate hikes could come as soon as next month.
Both rising inflation and fears about interest rate hikes have caused the crypto and tech markets to go haywire lately. For example, Polkadot is down 53% over the past three months, and Silvergate Capital is down 45% over that period. Meanwhile, Crypto.com Coin is up about 38% over the past several months.
Investors may want to brace for more uncertainty in the crypto market considering that inflation is still a serious concern for the economy and higher interest rates could end up curbing growth for companies -- and cause investors to sour on more speculative investments -- in the coming months.
