The crypto industry came to life this week as investors poured into everything from the biggest token to the smallest. But there were some notable movers for the week.
According to data provided by S&P Global Market Intelligence, Solana (SOL -5.08%) is up 38.6% in the past week as of 3 p.m. ET Friday, Chainlink (LINK -4.28%) has jumped 36.8%, and Cronos (CRO -0.85%) is up 37.6%.
Behind the pop in crypto this week
The biggest news in crypto is BlackRock saying it wants to launch an Ethereum ETF. That's leading to speculation that smaller tokens like Solana or Chainlink could eventually get their own ETFs.
While you can own any cryptocurrency outside of an ETF, many investors see ETFs as the cheapest and easiest way to own assets, and one theory is that more ETFs will lead to more money coming into the industry.
Development on Solana has been some of the most notable despite the bear market and the drop in value related to FTX's collapse. Companies like Shopify and Visa are now building products and payment systems on Solana.
Chainlink is seeing developments like a project with Vodafone earlier this year. Cronos would like to join that development cycle, having announced a $100 million accelerator program in September.
The hype cycle of crypto died down over the past few years, but the momentum appears to be back, and it's a virtuous cycle when it gets going. Higher values attract more attention, which leads to higher values, and that's what's going on at the moment. It's not clear yet if this trend will last, but bringing more investors into the space and having more economic activity on the blockchain could only be a good thing for valuations.
More answers are needed
The moves this week are driven by volatility and hype, so there may not be a lot of staying power if the market turns south.
What I'm looking for in the next few months will be answers to regulatory questions like when ETFs will be allowed, and when the Securities and Exchange Commission or U.S. Congress will outline clear rules for trading and development on the blockchain. If those two things get answered, we could see more investment in businesses building and innovating on the blockchain.
I do think Solana and Chainlink are two of the leaders when it comes to utility blockchains, so if companies start using these products, these tokens could be winners.
Investors considering cryptocurrencies today should be aware that volatility is going to be high for tokens, and there's still regulatory uncertainty in the U.S. We have seen both the positives and the negatives of that volatility in the past three years, and while that's working for investors right now, that could flip very quickly.
