While it's dangerous to believe that any rally will continue indefinitely, investors were surely getting that impression with cryptocurrencies this week. So many notched double-digit percentage gains, it was almost as if anyone could put on a blindfold, point to a name, and grab a sharply appreciating asset.
A great many altcoins would have done the job. According to data compiled by S&P Global Market Intelligence, for example, BNB (BNB +0.96%) booked a weekly gain of 10%, while Hedera (HBAR +1.87%) edged past it with a 11% rise. Not to be outdone, VeChain (VET +0.88%) zoomed nearly 20% higher and Internet Computer (ICP +4.00%) defied gravity at an almost 30% clip.
No roadblocks on this rally
The rally continues to thunder along largely because there's nothing stopping it. Much of this has to do with macroeconomic factors, chiefly dwindling inflation and the prospect it opens for interest rate cuts.
Inflation seems to be cooling around the globe. On Wednesday, the U.K.'s office for National Statistics revealed in its latest data dump that the country's increase in consumer prices, a leading inflation indicator, rose by 3.9% on an annual basis in November. That might sound chunky to American inflation hawks, but it actually represented quite a fall from the previous month's 4.6% increase.
Meanwhile, on our shores, Federal Reserve officials are now openly discussing the "how much" and "when" of cuts to the regulator's key interest rate. This discussion would have been nearly unthinkable even six months ago, when inflation was notably more stubborn than today.
All this plays beautifully into the hands of risk-taking investors. Yes, many altcoins have practical uses. Internet Computer, for example, laces together data centers so they can connect, disseminate, and share information without the need for a central machine. However, few if any have proved to be the anchors of blockchain systems that can produce strong and steady profits.
CRYPTO: BNB
Key Data Points
An easier way to invest in cryptos
That increased taste for risk is mirrored by the outperformance of many volatile equities. Some, like cryptocurrencies of late, have motored well higher than their "safer" and steadier peers. All in all, the market as a whole is more willing these days to speculate on jumpier assets.
Another factor worth mentioning hasn't yet materialized -- regulatory approval for spot cryptocurrency exchange-traded funds (ETFs). These would allow investors to put their money almost directly into choice coins and tokens in one fell swoop, rather than go through the many motions of buying cryptos outright.
Spot crypto ETFs are like ultra-low inflation numbers, in that they are still in the "hoping and wishing" stage. Many altcoin investors, though, believe both will become reality very soon.
