After a thorough beating in the digital currency market, blockchain and crypto industry-related exchange traded funds climbed Friday, leading the broad market gains.
Among the best performing non-leveraged ETFs of Friday, the Viridi Cleaner Energy Crypto-Mining & Semiconductor ETF (RIGZ) was up 10.3%, the Global X Blockchain ETF (BKCH) increased 10.5%, the VanEck Vectors Digital Transformation ETF (DAPP) advanced 13.0%, the Bitwise Crypto Industry Innovators ETF (BITQ) rose 11.6%, and the Amplify Transformational Data Sharing ETF (BLOK) gained 7.3%.
The surge in crypto industry stocks and digital currency mining companies suggests investors believe the recent market pullback was overdone as cryptocurrencies suffered a massive blow from the risk-off selling. Nevertheless, it is yet to be determined whether or not Friday’s price moves reflected the beginning of a bottoming process or just a dead cat bounce.
Volatility will likely continue and risks remain as the crypto industry faces increased regulatory scrutiny.
The broad flight from risk assets contributed to halving the price of bitcoin and other cryptocurrencies, erasing over $1 trillion worth of digital money since November, the Wall Street Journal reports.
While bitcoin and other digital currencies have been called upon as potential inflation hedges, things have played out differently. The spike in inflation has pushed the Federal Reserve to hike interest rates more aggressively, which investors believe could trigger an economic recession through their zeal to combat rising prices. Consequently, risky assets, like cryptocurrencies, have taken the brunt of the recent beating.
Further exacerbating the wild, the cryptocurrency market that was once dominated by retail investors are now being pushed aside by large institutional investors such as hedge funds, and many of these large investors have been caught on the wrong side of the trade this time around.
The exiting investors from the crypto market have weighed on platforms like Coinbase (COIN), which saw share prices plunge almost 85% since the high in November and even lost half their value in the past week.
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