Why Altcoins Were Zooming Higher on Wednesday

When the financial history books are written, 2024 is sure to be recorded as a banner year for the burgeoning crypto industry. Market-boosting catalysts, from the introduction of spot exchange-traded funds (ETFs) to a presidential election that delivered a crypto-friendly administration to the White House, seemed to occur every few weeks. On Wednesday, yet another positive development pushed the prices of many coins and tokens higher.

As with other 2024 rallies, this one was broad and deep. Holders of top utility tokens Solana (CRYPTO: SOL) and Cardano (CRYPTO: ADA) did well, with their assets rising by nearly 7% and almost 8%, respectively. Shiba Inu (CRYPTO: SHIB), a meme crypto whose developers are pushing hard for respectability, advanced by just under 9%, while Bitcoin (CRYPTO: BTC) fork Bitcoin Cash (CRYPTO: BCH) was trading nearly 6% higher.

A return to six-figure status

Speaking of Bitcoin, the leading cryptocurrency was at the heart of this latest rally. Wednesday morning it once again crossed over the $100,000 level, for the first time since breaching that psychologically important barrier nearly one week ago.

That initial move didn't hold, as Bitcoin retreated to below that six-figure mark and stayed there for several days. This one seems to be sticking, at least for now; as of late afternoon, Bitcoin's price was a shade under $102,000.

Bitcoin specifically and cryptocurrencies generally do not, of course, exist in a vacuum. Wednesday was a good day for securities markets overall, following the release of the government's latest set of inflation data. These revealed that the consumer price index (CPI) rose by 2.7% on a year-over-year basis in November, and 0.3% from the October level. The previous monthly increase, measured annually, was a tick lower at 2.6%.

Yes, this data shows that inflation is still rising, but these latest advances were more or less in line with economist and analyst expectations -- plus that percentage rise was barely changed from the previous month.

The timing of this is fortuitous, as it comes shortly before the Federal Reserve's (Fed) Open Market Committee meeting convenes to determine whether to cut interest rates. The Fed has been somewhat of a hawk on inflation lately, with two recent interest rate cuts. Anticipations had been that it would also enact a slice at the upcoming meeting, and with the in-line November CPI data this seems an even stronger possibility.

Will the holidays be happy?

The slight downside to this for the cryptoverse is that, following the jump in prices following the release of the data, there might not be much of a bounce if and when the Fed actually cuts rates (as is now more widely expected). I don't expect crypto values to sink in these final days of the year; however, without new catalysts it's possible we might be looking at one of the last pops between now and the start of 2025.

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Eric Volkman has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin, Cardano, and Solana. The Motley Fool has a disclosure policy.