It has been a pretty tough market for them lately cryptocurrency investors. But despite nearly a week of consistent selling pressure, several large-cap cryptocurrencies are recovering well today. Ethereum, Polkadot and Dogecoin were up 6,3%, 6,1% and 3,1% respectively in the past 24 hours.
These moves come as investors appear to be buying yet another market downside, as enthusiasm for key catalysts, such as the upcoming Ethereum merger, outweighs concerns over the ongoing heated debate in the Ethereum community over whether validators actually censor some transactions.
Interestingly, Ethereum and Polkadot took the top two spots in terms of the most developed blockchain ecosystems, according to a recent report from cryptocurrency analytics website Santiment that used publicly available information. Investors seem keen to focus on blockchains with steady and sustained development.
Dogecoin's price action, while more subdued than its peers, appears to align relatively with the overall price action of the current market.
Cryptocurrencies are difficult to value
Ethereum, Polkadot and Dogecoin are three tokens that many investors watch closely both as fast-growing projects and as indicators of sentiment in the cryptocurrency world. Today's interesting shift towards a more bullish outlook by investors and traders is noteworthy and all three tokens benefited from this catalyst. But the growth metrics that underpin Ethereum and Polkadot in particular deserve to be considered by investors who have a long-term view.
In fact, while cryptocurrencies are difficult to value, many consider the true value of a given token to be representative of the value of all projects on its blockchain. For Ethereum or Polkadot, which are tokens representing blockchains with huge ecosystems, higher growth should, in theory, mean higher token prices. Continuous and sustained growth over a long period of time is therefore important for investors with a long-term investment horizon.
What will happen now?
For Ethereum and Polkadot in particular, the upcoming Ethereum merger, scheduled for mid-September, is a major catalyst. This update will lead the Ethereum blockchain to a more energy efficient proof-of-stake validation mechanism. This carries great potential for improving efficiency over time, albeit with some specific risks.
While both tokens have seen a notable rise from their June lows, it is clear that the market is still waiting to understand how this merger will turn out. Despite today's bullish action, some investors may be inclined to stay on the sidelines.
While I think this update should be positive, there are certainly risks to these tokens. As a result, it will be interesting to see how these tokens perform over the coming weeks.
