Why Altcoins Like Optimism and Stacks Were Big Winners This Week

The cryptocurrency market was roaring this week, with a great many coins and tokens shooting notably higher and producing handsome returns for investors.

Among the numerous beneficiaries were investors in altcoins Optimism (CRYPTO: OP), Stacks (CRYPTO: STX), and Hedera (CRYPTO: HBAR). According to data compiled by S&P Global Market Intelligence, over the period Optimism and Stacks both rose by almost 17% in price, while Hedera shot more than 15% higher.

New bank worries crank crypto demand higher

When a broad altcoin rally occurs, it’s usually because the crypto king Bitcoin is sailing higher. Sure enough, Bitcoin surged in the last few days, crossing the psychologically important $45,000 barrier to hit $48,000-plus before retreating a bit on Friday. That was its highest level since Jan. 11, not coincidentally the day spot Bitcoin exchange-traded funds (ETFs) went live for public investment.

The better cryptocurrencies — and Bitcoin, Optimism, Stacks, and Hedera certainly qualify — are seen by many investors as hedges against volatility in more established assets. So when part of the traditional finance industry sees a shake-up, demand for digital coins and tokens often rises.

This was a major dynamic behind this week’s broad rise. Worries are growing about the viability of the U.S. banking system, in the wake of the bad stumbles of New York Community Bancorp (NYSE: NYCB).

The bank, which is small and hadn’t ever been considered a major or important lender, published a significantly worse-than-expected quarterly earnings report. Much of this was due to the company’s considerable portfolio of loans for commercial space. Within this category, office property owners have struggled to cope with the proliferation of remote and hybrid working arrangements.

The fear is that other banks deep in the office space lending segment could start to struggle like NYCB, and perhaps in the worst-case scenario begin collapsing to start a rout. That would be disastrous for the wider financial system, hence the hedging with name cryptocurrencies.

Expect more spot altcoin ETFs before long

Another factor is those newfangled ETFs which, so far, are only available in Bitcoin flavor. Already, financial services companies are scrambling to meet a May deadline for filing spot ETFs for that daddy of all altcoins, Ethereum. The popularity of spot Ethereum ETFs is sure to at least approach that of their Bitcoin cousins.

So it’s inevitable that there will be future spot ETFs covering one or more altcoins down the chain. I think the more popular utility coins and tokens will soon start to get the spot ETF treatment. They will surely benefit from the subsequent rise in demand as the foundational assets for these securities.

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Eric Volkman has positions in Bitcoin and Ethereum. The Motley Fool has positions in and recommends Bitcoin and Ethereum. The Motley Fool recommends Hedera Hashgraph. The Motley Fool has a disclosure policy.

Why Altcoins Like Optimism and Stacks Were Big Winners This Week was originally published by The Motley Fool

https://finance.yahoo.com/news/why-altcoins-optimism-stacks-were-235528473.html

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