It's been an interesting day, to say the least, for cryptocurrency traders. The value of crypto jumped yesterday but some tokens started falling late in the day. For some, the sell-off accelerated during the day Tuesday.
Kadena (KDA) has been one of the biggest movers, climbing 23.5% at its peak but dropping far enough that it's only up 3.2% as of 3 p.m. ET. Shiba Inu (SHIB -0.96%) was the big winner yesterday and was up 3.6% at one point today, but it is currently down 10.2% in the last 24 hours. XRP (XRP -0.69%) was another crypto that was up big yesterday and it's holding gains, trading up only 2.7% for the day, but it was once up 14.7%.
A big piece of news today is that Alchemy, a cryptocurrency and Web 3.0 infrastructure company, raised $200 million at a $10 billion valuation today. The reason deals like this are important in crypto is that they're helping provide the infrastructure layer that developers will build on, while cryptocurrencies provide the currency and blockchain for applications. So, big investments are generally bullish for crypto overall.
XRP continues to climb as the cryptocurrency's developer, Ripple, battles with the Securities and Exchange Commission (SEC). Unsealed documents show that Ripple got an analysis that XRP was not considered a security, something the SEC says it is, and that could help the company's position in the suit. But traders are likely seeing the end of this legal battle as a positive sign, no matter the verdict or settlement.
So, what's with the drop in trading on Tuesday? The selling was widespread and seemed to hit Kadena, Shiba Inu, and XRP after bigger cryptocurrencies like Bitcoin. But when the big crypto names fall, the smaller names usually aren't far behind.
Today's moves both higher and lower can largely be chalked up to volatility. The crypto market can rise or fall at a moment's notice and the buying that's happened over the last week or so had to end at some point. Tuesday may just be a breather in that respect.
What's more important for the long term is investments like the one in Alchemy today, because that's going to build the utility investors are hoping to see in the crypto economy. Decentralized finance is starting to make its way into traditional finance products like payments, and non-fungible tokens (NFTs) are becoming a popular way to build a utility for other projects.
Investors need to remember that volatility will be standard for cryptocurrencies for the foreseeable future, so it's announcements about venture capital investments or real-world utility that are most important to look at. The day-to-day movements are just noise in the market.