Why Altcoins Were on Fire Wednesday
The crypto winter we experienced earlier this year is quickly becoming a faded memory. The rally in all manner of digital coins and tokens showed no sign of abating Wednesday, with a clutch of altcoins doing particularly well on the day.
No one was laughing at meme coins that day; once figures of ridicule and derision, both Dogecoin (CRYPTO: DOGE) and Shiba Inu (CRYPTO: SHIB) did well, with the former up by over 4% in mid-afternoon trading and the latter rising in excess of 5%. Not to be outdone, some more "serious" cryptocurrencies were flying higher. One prime example of this was Avalanche (CRYPTO: AVAX), with a more than 13% gain.
The Bitcoin effect in full force
While it wasn't the only reason for Wednesday's pops, the performance of the top cryptocurrency (and arguably the class leader) Bitcoin (CRYPTO: BTC) was bringing on the bulls. Investors are in a speculative mood these days, as worries about inflation and other macroeconomic headaches fade. This is compounded by the -- some feel -- imminent approval coming for cryptocurrency spot exchange-traded funds (ETFs).
This combination is really lighting a fire under Bitcoin. At one point Tuesday afternoon, the coin peaked at a price of $45,000 apiece before settling down slightly below that level (as of this writing it's humming along at a bit under $44,000). That $45,000 is 17% higher than the Bitcoin price at the beginning of this month. To put that in a sobering perspective, the price hike happened only five days ago.
If investors are bullish on Bitcoin, you can be sure they're hot on altcoins too. Dogecoin, Shiba Inu, and Avalanche also have the benefit of being well-established cryptos on the market. Investors like familiarity.
Dogecoin was one popular dog Wednesday morning
Not all coins and tokens were benefiting solely from the slipstream effect. Dogecoin zoomed notably higher early Wednesday when a regulatory document disclosed that Elon Musk's artificial intelligence (AI) start-up X.AI was seeking up to $1 billion in a potential equity offering (adding to the nearly $135 million it has already managed to draw from investors).
Musk is famously a Dogecoin bull, so speculators -- excited that Dogecoin will somehow be swept up in any grand venture by the entrepreneur -- tend to crowd into it after such news. Musk himself quashed the rally by writing on his X (formerly Twitter) that "We are not raising money right now." Still, the early pop kept Dogecoin's price well above the water in recent trading.
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Eric Volkman has positions in Bitcoin. The Motley Fool has positions in and recommends Avalanche and Bitcoin. The Motley Fool has a disclosure policy.
