The market was back in a risk-taking mood this week, and that was good for cryptocurrencies across the board. It didn't hurt that there was also some positive news about development on the blockchain.
According to data provided by S&P Global Market Intelligence, Avalanche (AVAX -3.29%) is up 66.6% since 4 p.m. ET last Friday and was up as much as 68.7% this week. Solana (SOL -5.17%) is up 6.9% and was at one time up 24%. Filecoin (FIL -2.09%) is up 8.8% and peaked at a 17.4% gain.
Crypto speculation and crypto utility
It's impossible to deny that the market's move back to riskier assets this week was driven by a positive inflation report on Tuesday. Inflation in the U.S. was flat month over month, and that caused the market to speculate the Federal Reserve would keep short-term rates flat over the next few months -- and may even cut rates in 2024. The stock market spiked on the news, and cryptocurrencies followed.
Avalanche got some positive news when JPMorgan Chase announced it had tested tokenized portfolios using multiple blockchains, including Avalanche. Banks and brokerages are testing confirming financial transactions on the blockchain rather than using traditional systems. This could be less expensive and provide better interoperability between institutions around the world.
Solana's momentum continues as investors begin to look past the stigma of the token and realize its fast speeds and low cost could provide the kind of utility needed for mass adoption.
Continuing the move for utility tokens is Filecoin, which is used to store data on the blockchain. Decentralized exchange Sushi was also launched on the Filecoin blockchain this week. If the blockchain is used for valuable uses like banking and trading, it is likely Filecoin will get more usage as well.
A more mature crypto industry
After years of crypto trading that wasn't rooted in real utility or value creation long term, we are starting to see some intriguing use cases emerge. JPMorgan's tests could be a precursor to more financial industry uses for cryptocurrency, and there are all kinds of concepts being tested on Solana.
This is a period of maturation for the industry, but it may not play out in the way investors hoped. Businesses are looking for what they can build on the blockchain and how they can save costs or add value, not necessarily about the ups and downs of token values. I'm bullish on the blockchain, but also not convinced each of the native tokens will be the biggest beneficiaries of rising blockchain usage.
It may be time to start taking some gains off the table after a month of speculative increases in cryptocurrencies. I think this is an industry with a bright future, but the token gains may not last if the economy or stock market goes south.
