Why Altcoins and Crypto Stocks Were Monster Winners This Week

Many investors in cryptocurrencies and their related assets were sorry to see October fly away. For the most part, such investments rose powerfully in price during the month, melting away the latest crypto winter as if it never descended in the first place.

Happily for those folks, the October surge extended into early November. According to data compiled by S&P Global Market Intelligence, many saw big increases across this week.

Among these risers were crypto miner Riot Platforms (RIOT 0.80%), which gained more than 19% during the period. Metaverse token Axie Infinity (AXS 2.02%) wasn’t far behind with a nearly 16% rise, while Polkadot (DOT 2.03%) and XRP (XRP 1.53%) both increased over 12%.

Fed by the Fed

The latest major catalyst for the crypto market was the most recent decision from the Federal Reserve on Wednesday, when the central bank and regulator decided not to raise its benchmark federal funds rate, in contrast to its near-regular habit since early 2022.

Crypto investors love when the Fed leaves rates unchanged. That’s because when they get pushed up, the value of bellwether investments considered to be safe tends to rise. The most notable example of this is the yield of the 10-year Treasury note. That yield, by the way, continues to drop from its mid-October peak.

Gazing into a crystal ball, rate hikes in the immediate future appear to be less of a possibility.

On Friday, the U.S. Labor Department released its latest monthly employment data, showing that employers added a relatively modest 150,000 jobs in the country last month, for the weakest month-over-month increase since June. The unemployment rate, meanwhile, inched up to 3.9%. Wage growth also slowed. All this might give the Fed pause to think about hiking rates, as it could worsen those dynamics.

Other developments are also being considered as positives for cryptos and associated assets. The trial of Sam Bankman-Fried, CEO of the now-notorious failed exchange FTX, has concluded in a set of convictions.

This helps to bolster the feeling that there is accountability and culpability in the crypto world, as opposed the lawless Wild West atmosphere that detractors have accused it of fostering. In turn, this boosts confidence in coins, tokens, and the investments connected with them.

But is winter coming?

What goes up eventually comes down, and this crypto rally isn’t going to last for eternity. The question is, when will it hit the wall? Prices have come up — very significantly in some cases, after all — and there remain concerns about the wider economy and what the Fed is ultimately going to do about it.

Perhaps now is a good time for crypto short- to mid-termers to book at least some profits from their holdings.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends XRP. The Motley Fool has a disclosure policy.