What happened
Many of the most-watched cryptocurrencies are seeing interest rebound today, as investors continue to digest macro data and adjust their portfolios according to the aggregate risk profile the market is comfortable with. Top tokens Bitcoin (CRYPTO:BTC) and Ethereum (CRYPTO:ETH) appreciated 1.8% and 3.5%, respectively, over the past 24 hours as of 11 a.m. ET.
These moves generally aligned with the overall crypto market, which surged 3% higher over this same time frame. These moves also correlated with the price action we’ve seen in recent days, which shows Bitcoin as a lower-beta play relative to the overall market on up days and down days as well.
For meme token Dogecoin (CRYPTO:DOGE), a surge in risk-on appetite from traders has propelled this token 4.8% higher over the past 24 hours. Additional support for Dogecoin from talking heads such as Mark Cuban, and wider acceptance of Dogecoin as a means of payment from various corporations, has continued to spur interest in this meme token over the past day.
Image source: Getty Images.
So what
Today marks the first day in a while where we’re seeing cryptocurrencies really diverge from risk assets in the stock market in terms of returns. The directional moves of these top tokens does not align with most high-growth stocks today, which are down as of late morning. Accordingly, perhaps crypto bulls asserting that digital tokens could be viewed as a market hedge have a leg to stand on.
It appears investors are once again focusing in on the relative risk-reward of cryptocurrencies relative to equities today. As investors continue to diversify their portfolios, allocations toward digital currencies appear to be holding steady. Currently, the entire crypto market continues to hover around the $2 trillion mark, with these three tokens collectively making up more than half of the overall market.
Now what
Bitcoin and Ethereum remain the two top tokens most crypto investors watch closely. The daily price action of these tokens drives much of the sentiment across the broader crypto markets. That being said, the outsize moves some smaller tokens such as Dogecoin are making today provide an interesting bull thesis for those looking to take on additional risk.
Given this macro environment, adding more risk to one’s portfolio does seem like a dicey game to play. However, the divergence we’re seeing once again among crypto assets relative to stocks does add to the intrigue of this sector for investors. As always, investors looking to put some money to work in cryptocurrencies should be aware of the risks, and they should practice proper portfolio discipline in sizing positions appropriately and ensuring risk management protocols are in place.
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.
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