The bitcoin market has been bumpy today. As of 3 p.m. ET, the crypto market is down 3.9% over the past 24 hours, led by Bitcoin (CRYPTO: BTC), Ethereum (ETH), and Dogecoin (DOGE). Over the same period, these three largest coins have fallen 4.5%, 5.1%, and 7%, outperforming the market.
Due to their popularity among investors, these three cryptos are keenly studied. Bitcoin and Ethereum, the world's largest and second-largest digital assets, are industry benchmarks. The sector's value is mostly going to these two tokens, which account for over half of its worth. Dogecoin investors can learn a lot about sector mood, especially among speculators, from its price moves.
This year was supposed to be the risk-on rally, right? Bitcoin and Ethereum, viewed as stores of value, appear to be affected by rate cut bets and the U.S. dollar (which has been strong for a month). Like other commodities, these leading cryptocurrencies benchmarked against the dollar will be affected by dollar strength and predictions that interest rate reduction may be fewer or farther away than expected.
Concerns over cooling Bitcoin ETF demand have also lowered Bitcoin and the market today. As of April 1, these exchange-traded products had net daily outflows of $1.1 billion, undermining the idea that strong demand and a Bitcoin halving event may boost prices
This could potentially reduce Ethereum demand before spot ETFs are established and institutional capital floods into this digital asset.
While Dogecoin set a two-year high this week, its drop today should be considered. The world's largest meme token's spinoff and Coinbase futures contract launch are still generating interest. As with most daily changes, Dogecoin's outsized collapse is due to its nature as a speculative asset traders use to wager on bigger price moves.
Is the party over? This crypto surge has been orderly, so investors should see today's dip in these three leading tokens in context. A 5% to 7% daily fall in any asset is significant. In general, higher-risk volatile assets move this way often. Thus, I'm not sure if today's fall ends this year's robust rally. Not yet.
Investors should watch macro data and ETF inflows to determine digital asset demand for now. ETF inflows have dropped in recent days, which is expected given this year's run-up. It remains to be seen if investors return to this asset class or if a wider rotation is underway.
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