The cryptocurrency market continues to rise thanks to bitcoin's (CRYPT: BTC) rise and success of Bitcoin exchange-traded funds (ETFs). There is no doubt that the industry is pushing for more ETFs as investors demand these products in increasing quantities.
But this week's big moves came in smaller, more utility-based tokens. According to data provided by S&P Global Market Intelligence, solarium (CRYPT: SUN) has risen 28.4%, CLOSE Protocol (CRYPT: NEAR) has increased by 29.6%, and avalanche (CRYPT: AVAX) has gained 35.1%. They are rising because the overall industry is rising, but there are token-specific factors as well.
The ETF craze continues
Bitcoin ETFs hit an incredible $1 billion in inflows in a single day this week as ETFs continue to gather assets and drive awareness and adoption of cryptocurrencies. The next phase could be the approval of more ETFs by the Securities and Exchange Commission (SEC), which could again lead to greater adoption.
There have been meetings at least exploring Ethereum (CRYPT: ETH) ETFs, which would be the next natural step in the crypto ETF market. If Ethereum ETFs are approved, we will likely see tokens like Solana, NEAR, and Avalanche next because they have many of the same features.
Blockchain innovation
Solana has been one of the fast and low-cost blockchains, and has even had congestion issues recently as the company faces increased usage. Developers have been taking advantage of Solana even in the period of market decline, and it is now clear that there are more active users, whether purchasing non-fungible tokens (NFTs), conducting financial transactions, or implementing smart contracts.
This has required the development team to push updates to the blockchain that improve storage and speed, but those are big problems because it means real businesses are being built on the blockchain.
For NEAR Protocol, it was enough that the founder was a speaker at NvidiaThe AI โโconference to increase the token value. Many blockchains argue that cryptocurrencies are key to what is AI and what is not, and can make infrastructure more efficient.
The Avalanche Foundation announced that it is purchasing meme coins, hoping to draw attention to the blockchain. This seems crazy, but if trading volume increases, it could increase activity on the chain and help the blockchain gain momentum.
The crypto bubble is inflating
It's difficult to look at the recent rise of cryptocurrencies and see much more than a bubble that is inflating. While there is more activity today than a year ago, there are not many companies creating real applications on blockchain. Companies are creating tools, but most are not yet implemented and will not use the well-known crypto tokens as a medium of exchange.
The real reason values โโare rising is because cryptocurrencies are gaining attention and money is flowing into Bitcoin as a store of value. That drives the entire industry, but if inputs turn into outputs, the bubble could burst. We have seen this before in 2022, and that is why I am cautious about buying crypto assets today.
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Travis Hoium has positions in Ethereum and Solana. The Motley Fool has positions and recommends Avalanche, Bitcoin, Ethereum, Nvidia and Solana. 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.
