Crypto Comeback Gains Momentum Friday as Bitcoin, Ethereum, and Dogecoin Soar

It's been a volatile week for the crypto markets, only for most tokens to go almost nowhere. Bitcoin (CRYPTO: BTC) is up 5.6% in the past 24 hours as of 4 p.m.

Major cryptocurrencies rebounded on Friday following a sell-off earlier in the week, as inflation data and the threat of higher interest rates sparked concerns among investors.

Bitcoin (CRYPTO: BTC) rose 5.6% over the past 24 hours as of 4 p.m. ET, trading at $24,220. However, the world's largest cryptocurrency by market capitalization was up only 0.9% in the past seven days.

The Labor Department reported on Thursday that the Consumer Price Index (CPI) rose 2.4% over the past year, while core inflation, which excludes items like energy, was up 3.3%. The higher-than-expected inflation reading caused concerns that the Federal Reserve will not cut rates as much as hoped in 2024.

As a result, the crypto market dropped on Thursday, with Bitcoin falling below $23,000 at one point. However, the cryptocurrency recovered some of those losses on Friday, though it remained below the key level of $25,000.

Ethereum (CRYPTO: ETH) also rebounded on Friday, rising 3.9% in the past 24 hours to trade at $1,720. The second-largest cryptocurrency by market cap was up only 1.2% in the past seven days.

Memecoin Dogecoin (CRYPTO: DOGE) had a strong day on Friday, rising 6.3% to trade at $0.13. However, the token was up only 0.7% since last week.

The volatility in crypto prices this week was largely due to the inflation data, which also impacted the stock market and interest rates. The S&P 500 dropped on Thursday following the CPI report, while the 10-Year Treasury yield also rose.

Despite the short-term impact of inflation and interest rates on crypto, the long-term trend may be working against the most popular tokens.

Blockchain developments and uses have primarily used stablecoins, not crypto tokens, to make transactions and potentially disrupt the financial system. A stablecoin tracker from Visa (NYSE: V) shows $1.6 trillion in transaction volume for stablecoins over just the last 30 days.

If innovation happens on the blockchain with stablecoins as the transaction medium, tokens like Bitcoin, Ethereum, and Dogecoin won't have as much value for investors. As the blockchain matures, that could pressure the most popular tokens in the world, which have become little more than trading assets for investors recently.

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