Cryptocurrency investments went a little wild this week, with major coins and altcoins alike up double digits at certain points. Trading settled down as the period wore on and gains were pared, but it was a strong week nonetheless.
According to data provided by S&P Global Market Intelligence, the most notable moves in the altcoins space since midnight EST on Nov. 5 were:
- Avalanche (CRYPTO:AVAX), which was up as much as 32.3% in the period but is up 10% as of this writing at 10:30 a.m. EST today;
- NEAR Protocol (CRYPTO:NEAR), which jumped as much as 26% and is now up 12%;
- Algorand (CRYPTO:ALGO), which was up as much as 24.3% and is now trading 17.3% higher; and
- Stellar Lumens (CRYPTO:XLM), which was up as much as 22.2% and is now up 8.3%.
Why are so many cryptocurrencies moving in tandem this week? The first and biggest answer is the Infrastructure Investment and Jobs Act that passed a week ago. The stimulus will put more money into the economy, which some view as bullish for cryptocurrencies, but the more notable impact is the rules it places on the industry.
One of the act’s provisions is the expansion of the tax reporting rules for many cryptocurrency companies, which may even include miners. The industry fought this provision and saw it as written too broadly, but what it does in one sense is legitimize the cryptocurrency industry from a regulatory and tax perspective. Once Washington, D.C., begins to regulate and tax cryptocurrencies, it will all but ensure that the industry won’t be upended by any kind of bans in the U.S.
More specific news did come out of Avalanche this week, announcing that Tether will go live on the Avalanche decentralized finance platform. Tether has also launched on Polkadot, Kusama, and Solana, so this is a nice vote of confidence for the Avalanche platform long term.
I’ll also note that NEAR announced an $800 million funding program to accelerate ecosystem growth at the end of October. What we’re seeing with the news from Avalanche and NEAR is that these crypto organizations are trying to build utility for their projects, and they’re pouring money into that while building the necessary networks as well.
Altcoins have had a wild few months, and the trend continues to be higher for most of them. This week was maybe just one step in the direction of legitimacy for the crypto industry in the eyes of U.S. regulators, and that certainly got investors excited.
We also continue to see money pouring into the cryptocurrency industry as more people become aware of an excited about the future of crypto. That’s leading to at least some of the volatility we see today.
It’s certainly possible that some of the gains of the past week will be lost next week, and based on trading in the last 24 hours, that seems to be happening already. But long-term investors should be a little more bullish on the future of crypto, and ultimately this will be a good place to make money, even if there’s volatility along the way.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.