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Why Are Bitcoin, Ethereum, and Dogecoin Rising Today?


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This article was originally published on Fool.com. All figures are in US dollars unless otherwise noted.

What happened

Cryptocurrencies continued their gains this morning as bond yields fell and investors became more optimistic about the trajectory of interest rates. This week also saw a clear cut for several notables cryptocurrencies.

Over the last 24 hours, prices for Bitcoin (CRYPT: BTC), Ethereum (CRYPT: ETH)and Dogecoin (CRYPTO: DOGE) all have achieved considerable success.

The price of Bitcoin rose about 6.6% to hover around $20,777 as of 10:26 am ET today. The price of Ethereum rose by about 13.4%, while the price of Dogecoin rose by 10.4%.

And what

Cryptocurrencies have been battered throughout the year due to aggressive interest rate hikes by the Federal Reserve, which also sent bond yields soaring.

But bond yields have edged lower this week, with the yield on the 10-year U.S. Treasury note falling from 4.2 percentage points earlier this week to just over 4 percentage points at the time of writing.

This has boosted stocks and cryptocurrencies as investors hope that perhaps much of the Fed’s rate hikes will end soon.

But in other news, there were reports of a big one short squeeze this has led to the recent successes of Bitcoin and Ethereum. CoinDesk reported that major exchanges have seen some of the largest short liquidations since mid-2021.

Major crypto exchange FTX has reportedly recorded $745 million in short liquidations across all tokens on its platform over the past day, while $908 million has been recorded across all major exchanges in the past 24 hours.

During a short squeeze, the price of a stock, or in this case a cryptocurrency, rises, with investors shorting the stock either deciding or being forced to cover their position by buying shares of the asset, which in turn pushes the price up. Still, not everyone is convinced that this will lead to a sustained rally or that the pressure on riskier assets has stopped just yet.

“I remain bearish in the short term because we still need to see more signs that inflation is cooling,” Pablo Jodar of financial services firm GenTwo told CoinDesk.

He added: “After yesterday Alphabet earnings release, futures are already down. I wouldn’t be surprised if Bitcoin goes back down to $19,000 in the next few days.”

What now

It’s certainly been an interesting past few weeks for stocks and cryptocurrencies. After September, inflation data was worse than expected and showed no signs of easing, stocks and cryptocurrencies surprisingly rose higher.

Investors may be adjusting to the current environment and getting used to the Fed’s high interest rates, but I would also agree with Jodar that investors still need to see clearer signs of peak inflation. As long as there is no evidence that inflation is slowing, the Fed will have to remain aggressive.

The only good news is that, based on current projections, the Fed could theoretically complete almost all rate hikes by the end of the year.

​​​​​​While the near term remains uncertain, I like Bitcoin and Ethereum in the long term and am still not interested in the Dogecoin meme token due to the lack of real utility and the lack of technical advantages of its network.

This article was originally published on Fool.com. All figures are in US dollars unless otherwise noted.


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