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Why Altcoins Were Blasting Higher on Wednesday

Source The Motley Fool

Hump Day was clearly not presenting much of a hump for a great many cryptocurrencies, no matter how lightly capitalized or obscure. The market was, of course, trading largely on the news of Donald Trump's return to the presidency. More than a few crypto-heads believe he'll be the top advocate for their beloved asset class.

It wasn't hard to find crypto winners on Wednesday, with many running high on double-digit gains. As a group, altcoins and tokens were very much part of the rally -- Cardano (CRYPTO: ADA) was ahead by almost 7%, Bitcoin Cash (CRYPTO: BCH) was enjoying a nearly 9% lift, and Aptos (CRYPTO: APT) and Chainlink (CRYPTO: LINK) were both in the double-digit club with slightly over 10% rises as of 4 p.m. ET.

Cryptos "trumped" other asset classes

During his campaign to return to the White House, Trump tended to be vague about his specific policies. One pledge he did make was that he would turn the U.S. into "the crypto capital of the planet," although he was hardly specific about what this would entail. He also made promises about establishing a national "strategic reserve" of the leading digital currency, Bitcoin (CRYPTO: BTC).

Running mate and vice president-elect J.D. Vance is much more identified with cryptocurrency, and perhaps the key reason why the Republican ticket enjoyed far more support from the cryptoverse than their opponents. To his credit, Vance has put his money where his mouth is, holding between $250,000 to $500,000 in Bitcoin, according to a federal disclosure form submitted earlier this year.

This is why the Trump victory lit a fuse under Bitcoin's price. In fact, on Wednesday, it soared to new all-time highs in its more than 15 years of existence, at one point hitting $76,500. And if Bitcoin is traveling well higher, you can be sure that most altcoins will be coming along for the ride. So at the end of the day, we can characterize this as a Trump-and-Bitcoin-led surge.

Not to spoil the party, but...

The euphoria was entirely understandable, but it also sends up a yellow warning flag. Euphoric reactions with volatile assets like cryptos have a way of boomeranging back sharply, so we might be in for a correction before long. We should also bear firmly in mind that neither Trump nor Vance has outlined specific measures to enhance the value of Bitcoin and its ilk, and the real market-moving factors will be in the details.

That being said, the macroeconomic environment looks quite healthy for digital coins and tokens just now. So I wouldn't be surprised to see a few more days of broad gains.

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Eric Volkman has positions in Bitcoin. The Motley Fool has positions in and recommends Aptos, Bitcoin, Cardano, and Chainlink. The Motley Fool has a disclosure policy.

Disclaimer: For information purposes only. Past performance is not indicative of future results.

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