After a day of sell-offs on Friday, the cryptocurrency market saw some recovery momentum on Saturday. Starting at 10 a.m. ET, Bitcoin (CRYPTO: BTC) increased by around 3.3% compared to the closing bell of the stock exchange on Friday. In the meantime, ether (CRYPTO: ETH) and Dogecoin‘S (CRYPTO: DOGE) Tokens rose about 6.4% and 6%, respectively, over the same period.
Crypto prices began to rise in October and continued to gain ground until the momentum reversed in mid-November. The overall cryptocurrency market continued to move lower in December as investors weighed regulatory risk factors and the possibility that digital token valuations tend towards a longer downward cycle. That being said, the cryptocurrency market looks relatively calm right now.
Bitcoin hit a life high of $ 68,990.90 per token last month, but the token fell below the $ 50,000 per token mark in early December and is now trading at around $ 46,300 per coin. The cryptocurrency is down about 23% and about 33% from its peak in the last month.
Bitcoin has shown strong performance this year and is still by far the largest cryptocurrency, but there are signs that the market is shifting towards a different category of tokens. While Bitcoin can be used as a currency or a speculative investment vehicle, it seems that most of the excitement in the market has revolved around tokens associated with service and development oriented blockchain networks and applications.
In terms of dollars, Ethereum has led the cost of rotating the crypto market into application-based cryptocurrencies. The price of the network’s Ether token has risen amid the increased adoption of the network’s smart contract and application building capabilities, and some investors and analysts see this dynamic leading to “the flippening” – the moment when the market capitalization of Ethereum outperforms Bitcoin’s. The loss of only 8% in ether in the last month of declining crypto dynamics suggests that the token is gaining strength compared to Bitcoin.
Meanwhile, Dogecoin is down about 29% and about 75% from its high in the last month. Dogecoin price per token peaked at around $ 0.69 in May, but quickly lost ground as investors took profits after explosive gains. The token is struggling to regain ground as investors have generally become more risk averse and attention has shifted to other meme tokens.
Despite dramatic price volatility, 2021 was a year of fantastic returns for the broader cryptocurrency market.
Despite lagging behind in other cryptocurrencies, which have seen even stronger gains this year, Bitcoin has managed to make strong gains across trading in 2021 and it remains the top cryptocurrency. The token currently has a market capitalization of around $ 892 billion, while the Ethereum Ether token has a market capitalization of around $ 472 billion. Dogecoin’s even more incredible profits have helped it reach a market cap of $ 23 billion, and it is currently the 11th largest cryptocurrency.
As we move through the end of 2021, investors are trying to analyze how to weigh risks and find new opportunities with digital tokens and blockchain-based projects. While it is widely believed that the Federal Reserve’s policies, government incentives, and other economic factors have a much greater impact on the pricing of stocks and real estate, these factors also appear to have a significant impact on the cryptocurrency market.
Just as the ability to obtain low-interest loans leaked to drive stock prices higher, it likely also played a prominent role in the strong bull market in the crypto market last year. With the Fed potentially hike rates three times over the next year and easing stimulus spending, it’s possible that crypto valuations could face declining pressure if investors generally become more risk averse. For investors looking for exposure to the cryptocurrency space, sell-offs could be good buying opportunities, but averaging cost in dollars can be less risky than making large investments at once.
This article represents the opinion of the author who may disagree with the “official” referral position of a premium advisory service from the Motley Fool. We are colorful! Questioning an investment thesis – even one of our own – helps us all reflect critically about investing and make decisions that will help us get smarter, happier, and richer.