Why Altcoins Were Skyrocketing in Price This Week

For what feels like the umpteenth time this year, cryptocurrencies were having quite a stretch over the past few trading days. Buoyed by lingering optimism following the presidential election, they recently got an extra boost when one of their ilk finally vaulted over a very high price level. Aided by this, many cryptos, no matter how obscure or lightly capitalized, were booking double-digit price gains.

For example, as of early Friday morning, according to data compiled by S&P Global Market Intelligence, adorable dog-themed meme token Shiba Inu (CRYPTO: SHIB) had advanced by almost 18% and the more utilitarian Cardano (CRYPTO: ADA) was up by 12%. Meanwhile, Litecoin (CRYPTO: LTC) and Chainlink (CRYPTO: LINK) were soaring even higher, with respective increases of 35% and 32%.

The $100,000 coin

Those gains are undeniably impressive, but the No. 1 star of the week was not an altcoin. It was the pioneering and leading name in this asset class, Bitcoin. The coin smashed its all-time high price and did so in style, crossing the $100,000 mark after a run of nail-biting days bouncing around just under that level.

As any seasoned crypto investor can attest, what's good for Bitcoin is good for cryptos generally, as they more often than not follow the leader's trajectory.

There isn't much getting in the way of a broad rally just now, save for these rapidly ballooning prices. The economy continues to motor along, inflation seems to be cooling (although not as rapidly as some would like), and relatively few other financial assets are producing the kinds of returns generated by the Shiba Inus and Cardanos of the world.

The cherry on top is the coming arrival, in barely over one month, of a new presidential administration clearly sympathetic to the crypto industry.

All of this gives the feeling of a sustainable, and potentially long-term, rally for coins and tokens. I'd be a little cautious here, though, since we're at the point where this market is growing increasingly vulnerable to even minor negative news. Investors tend to get touchy when asset prices grow fast and broadly; the higher they climb, as the common wisdom goes, the harder they can fall.

We might not be in for a bear market just yet, but...

If that occurs, I'd envision altcoins taking a steeper tumble than Bitcoin.

Why? Well, for the most part they ascended higher and quicker than No. 1, on the back of investors seeking alternate high-returners while Bitcoin agonizingly teased that $100,000 level. There's also some doubt creeping into the market about whether the crypto king is really worthy of a six-figure price tag. After all, the coin's real-world utility leaves much to be desired, and with its volatility it might not be a reliable store of value besides.