This week, Dogecoin experiences a surge, while Bitcoin's impressive run persists.
The cryptocurrency market surge persisted during the weekend as Bitcoin (BTC) dipped slightly by 2.36% but still managed to soar past $85,000. Meanwhile, the Dogecoin (DOGE) meme craze persisted with a 7.00% drop. The election remains the focal point in the crypto world, and there's a growing sense of solidity to analyze its impact.
Between the closing of trading on Friday and 1:30 p.m. ET on Monday, Bitcoin saw a 10.1% rise, Ethereum experienced a 11.6% boost, and Dogecoin surged by 63%.
The MicroStrategy influence
Before the market opened today, MicroStrategy (MSTR) disclosed that it had purchased an additional 27,200 Bitcoins for $2.03 billion, increasing its Bitcoin holdings to over $11 billion.
This aggressive investment strategy has made MicroStrategy a significant player in the Bitcoin market. By selling both debt and equity, MicroStrategy continues to fund its Bitcoin purchases, acting as a consistent market influencer. The consequence is a self-reinforcing cycle where Bitcoin's value tends to rise as long as MicroStrategy continues buying at such a scale.
However, the market's faith in Bitcoin or MicroStrategy's future investments remains unpredictable. At a market cap of over $66 billion, with only $24 billion in Bitcoin assets on its balance sheet, the speculation around further investments has the potential to lead to more share sales, but with a proven track record, this has generally proven beneficial.
The Dogecoin frenzy persists
The value of Dogecoin continues to gain momentum, driven by anticipation that Elon Musk's potential involvement in government might generate some form of intrinsic value. While there is no concrete evidence that Dogecoin stands to benefit from Musk's involvement in policy, speculation has been driving up the coin's value.
Over the past week, numerous tokens and stocks have seen gains based on election-related speculation, despite a Trump administration being more than two months away.
Back to the real world
On a more significant level, policy changes are already underway. Pro-crypto candidates have been elected to both the House of Representatives and the Senate, which could pave the way for more crypto-favorable legislation.
Likely, the most immediate impact will be felt at the Securities and Exchange Commission (SEC), where names associated with pro-crypto companies like Robinhood Markets are being considered for appointments.
Whether these potential policy changes will benefit Bitcoin, Ethereum, or Dogecoin remains to be seen.
The big quandary for crypto
While a more favorable policy environment for crypto seems imminent in the coming year, the question is what it truly means. For coins like Bitcoin and Dogecoin, their current value stems solely from increasing prices, but there is no disruption of the existing financial system by these tokens.
Ethereum could potentially have more potential, given its increased use of the blockchain, but even the native token may not see much transactional usage. Instead, layer-2 blockchains and stablecoins have gained traction in transactions, and it's here where the real value lies, in the long term.
For now, speculation fuels the crypto market's upward trend, but investors should consider what happens when the speculation begins to wane. The underlying fundamentals of these tokens might not hold the same value once the hype dies down.
Investors who are interested in finance and the cryptocurrency market might want to closely watch MicroStrategy's future investing decisions, given its significant influence on Bitcoin's value due to its aggressive purchasing strategy.
To build a diversified portfolio, some investors might consider allocating a portion of their money into various cryptocurrencies, including those like Dogecoin that are driven by speculation and potential future developments.
