Why Many Altcoins Were Sliding on Friday
On the crypto market, there are a host of coins and tokens that anchor practical blockchains allowing users to conduct activities like drawing loans or playing online games. In contrast to other crypto types, these projects have won attention and investment due to their real-world applications.
This didn’t do much for them on Friday, however. A general pullback in cryptocurrencies generally drained a bit of value from a host of these assets. Utility cryptos Stacks (CRYPTO: STX), Litecoin (CRYPTO: LTC), and Cronos (CRYPTO: CRO) were all down by around 4% as of late afternoon trading that day. Game token Gala (CRYPTO: GALA) joined in with a similar fall, while finance token Injective (CRYPTO: INJ) was down by nearly 10%.
The Bitcoin bull run
The one coin that’s always in the lead — and the one that immediately comes to mind when most human beings hear the word “cryptocurrency” — is the most heavily capitalized one, Bitcoin (CRYPTO: BTC). Bitcoin’s vast and growing popularity make it the pace-setter by far in this asset class.
That’s been a boon for the industry generally in recent months, as Bitcoin has surged relentlessly of late. In fact, earlier this week it hit an all-time high of almost $74,000.
Naturally, much of this has to do with the January debut of spot Bitcoin exchange-traded funds (ETFs). These securities — which took months to win approval from the Securities and Exchange Commission — offer the benefits of near-direct Bitcoin ownership without the wonkiness and hassle of purchasing, storing, and managing Bitcoin holdings on one’s own.
Spot Bitcoin ETF inflows drying up?
In any environment when an asset or asset class is rising sharply, inevitably at some point in the rally profit-taking starts.
In this case of Bitcoin, this is chicken-and-egging with a notable decline in spot Bitcoin ETF inflows — no rally lasts forever, as we all know. According to reporting from Cointelegraph, on Thursday such assets recorded their lowest collective net inflow of $132 million. That was down by a steep 80% from Wednesday’s level, which in itself was 38% below the preceding day.
Some might think this indicates the start of a crypto market downturn. However, with macroeconomic conditions and developments still favorable (inflation, looming rate cuts, etc.), there is still much supporting the buy case for coins and tokens. So I don’t think there will be a massive sell-off. Still, we might be in for a somewhat less volatile period for both Bitcoin and altcoins in the near future.
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Eric Volkman has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin, Gala, and Injective Protocol. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
