Crypto enthusiasts saw a rally in the value of various tokens over 24 hours last June 20, but traders say the sector isn’t out of the woods just yet.
Tokens Solana and Ether were heading the top ten coins by market capitalization, each reporting a boost of around 9% to 9.7%. Likewise, Cardano and Polkadot were both up by 7%.
The cryptos in the top ten weren’t the only ones that showed signs of heading up during the rally, as several smaller players also registered gains. For example, the value of Avalanche’s AVAX token was up by 14%, while Polygon MATIC and ApeCoin were up by 12% and 16%, respectively.
But not everyone benefited from the June 20 rally. Indeed, Bitcoin only recovered slightly from its weekend drop to $18,000 as its value settled at around $21,000 during trading hours.
An Example of Crypto Volatility
However, analysts warn that this positive rally may be short-lived as numerous macroeconomic issues remain unsolved and the crypto sector remains highly volatile.
According to a statement issued by the Bitfinex trading desk, the June 20 rally shows that the price of digital tokens does have the potential to make a quick recovery despite the ongoing market turbulence and the instability of the current geopolitical environment.
Traders also noted many reported gains following a recent jump in broader equity markets. For example, while US markets were down for the Juneteenth holiday, the European index Stoxx 600 was up by 0.7%, while the German DAX posted a gain of 0.58%.
In Asia, the Hang Seng in Hong Kong was up by 0.42, but the Japan Nikkei 225 index was down by 0.72 and China’s Shanghai Composite registered losses as trading drew close on Monday evening.
According to cryptocurrency exchange AAX’s regional director Anton Gulin, the cryptocurrency sector is dependent on the interest rates pegged by the US Federal Reserve. Likewise, he noted that any sort of rally in the markets would not have a lasting, let alone significant, impact on the situation as a whole. Gulin added that while current market action provides opportunities for day-traders, this is not a suitable environment for investors who want to reduce their risk exposure.
To date, the US Fed hiked its interest rates by 75 basis points last week in its ongoing bid to combat rising inflation and control the cost of essential commodities.