Why Dogecoin, Monero, and Harmony Are Soaring Today

What happened

Today, a range of top cryptocurrencies are once again seeing buying pressure materialize. Meme token Dogecoin (CRYPTO:DOGE) surged 3% higher over the past 24 hours, as of 11 a.m. ET. Over the same time frame, security token Monero (CRYPTO:XMR) and Layer 2 blockchain network Harmony (CRYPTO:ONE) rose 7.6% and 7%, respectively.

It should be noted that, earlier this morning, each of these tokens surged substantially higher. However, as we’ve seen in previous days, cryptocurrencies appear to be moving in high correlation to tech stocks, with this morning’s sell-off related to rising interest rates taking most risk assets lower. 

Image source: Getty Images.

So what

Yesterday’s rally in the crypto market has continued into Thursday, with investors largely viewing the inflation numbers via the consumer price index report released this week as neutral. Some investors appear to have been expecting a catastrophic report, leading to widespread selling during the first week of this year. The recovery among various aggressive, high-risk assets this week has been a welcome surprise for many.

What’s notable among these three cryptocurrencies is the directional correlation they’ve had in recent days. Investors may consider a meme token, security token, and Layer 2 network as fundamentally different from one another — and they are. However, higher correlation across various crypto sectors increases the likelihood of increasing sensitivity to macro events, a reality crypto investors may not have seen coming.

Now what

It’s becoming more and more clear that crypto is being viewed by many investors as the next risk level up from tech stocks. With cryptocurrencies viewed as disruptive, high-growth investments, market sentiment driven by monetary policy is increasingly impacting this asset class, to a degree it may not have in the past.

The key takeaway many investors should have when looking at any crypto investment is that amplified volatility can work in both directions. The crypto sector has had a rocky start this year, among the worst in its history. Accordingly, the extent to which the positive price action we’ve seen over the past couple of days can hold, at least over the near term, is questionable.

That said, those taking the longer view on these tokens may simply want to wait out this near-term volatility. The market is doing what it does best, and as price discovery continues for these top tokens, investors will have to wait and see what the ultimate verdict is. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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