What happened

The market went on a wild ride on Thursday morning after inflation data was released and investors tried to project how that would impact the Federal Reserve's interest-rate moves. Early on, worry about higher rates resulted in falling stock prices, and cryptocurrencies were some of the hardest hit. But the drop passed quickly, and values have mostly recovered.

For example, Dogecoin (CRYPTO: DOGE) has had a strange day, falling as much as 7.7% in early-morning trading only to recover and trade about flat on the day as of 1:30 p.m. ET. Polkadot (CRYPTO: DOT) dropped up to 7.9% and is now down 1.9%, ChainLink (CRYPTO: LINK) was down as much as 11.7% and is currently off 2.8%, while The Sandbox (CRYPTO: SAND) plunged 10.9% and is now down 3.4% on the day.

So what

The biggest news of the day was the Bureau of Labor Statistics releasing data that showed consumer prices were up 8.2% year over year and 0.4% month over month in September 2022. This was a slightly higher inflation rate than investors were expecting, which was why stocks and cryptocurrencies dropped sharply early in trading.

Investors have spent much of the last six months trying to figure out how far and how fast the Federal Reserve will raise interest rates, and inflation is the Fed's biggest concern. So higher inflation is seen as a sign that the Fed will keep increasing rates, which hurts the value of risky assets.

It's worth keeping in mind that inflation is up big over the last year, but it's slowed dramatically since June 2022. Although 0.4% inflation month over month seems high, that's only one month. And the trend is toward tepid inflation right now, which might mean the Fed is closer to slowing rate increases, especially if there's a recession.

Now what

There's a lot to digest today, and the market seemed to have multiple views in just a few hours. But I think the takeaway is that the Federal Reserve will likely raise rates through the end of the year, and it's possible that will lead to a recession. This isn't a new concern; stocks have been falling for months on exactly this uncertainty.

For crypto, the impact of higher rates isn't really known. Investors might see this as a risky asset, but cryptocurrencies aren't risky companies that carry debt loads or aren't profitable. These are blockchain assets that might or might not continue trading in step with volatile securities like tech stocks.

I think today's move is another example of typical market volatility. There's no underlying change in what's being built on the blockchain today, but assets are being priced differently based on what the public thinks the Federal Reserve is doing. Investors with a long-term mindset should look past volatile days and focus on the long term, because that's what matters for our portfolios. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why crypto cratered before a quick recovery today appeared first on The Motley Fool Australia.

People keep talking about a "crypto winter" being here. But that doesn't mean all cryptos face hostile market conditions these days. Some altcoins are doing surprisingly well right now and have posted double-digit returns over the past 30 days, attracting a lot of buzz across social media. They are being talked up as tokens that could explode in value over the next 12 months.

However, not all of these gainers are worth investing in because they are simply too speculative for the average investor. But there are three altcoins that have steadily appreciated over the past month that are worth a closer look: XRP (CRYPTO: XRP), Chainlink (CRYPTO: LINK), and Algorand (CRYPTO: ALGO). To be fair, all three are down between 55% and 85% over the past 12 months. However, all three have characteristics that set them up for greater utility in the days to come. All three rank among the top 30 cryptos in the world by market capitalization. If you're thinking about juicing up your portfolio returns for 2022, these could be fantastic buys right now.

Algorand

Algorand, up 12% over the past 30 days, is a proof-of-stake Layer 1 blockchain founded by award-winning MIT professor Silvio Micali. Algorand has won kudos for its top performance metrics and has been regularly recognized as one of the greenest blockchains in the world. In addition, the Algorand blockchain got a speed and performance upgrade in September, boosting transaction processing speed from 1,200 to 6,000 transactions per second. Algorand also recently attracted attention in the crypto world for its new quantum cryptography efforts.

But what really has people excited about Algorand is its official partnership with the 2022 FIFA World Cup. In coordination with FIFA, for example, Algorand just launched an NFT marketplace for soccer NFTs. Look for Algorand to attract even more attention as the start of the World Cup nears in November. Right now, Algorand is a relatively little-known Layer 1 blockchain. After a massive worldwide audience tunes in to the World Cup, that could change. Moreover, the new soccer NFTs should boost overall activity on the Algorand blockchain and potentially attract new users and developers. In many ways, Algorand is an undervalued gem just waiting to be discovered.  

Chainlink

Chainlink, up 8% over the past 30 days, is a decentralized blockchain oracle network that feeds off-chain data, such as asset prices, to on-chain smart contracts. In layperson's terms, it means that Chainlink takes data from the real world and shares it safely and securely with other blockchains. While its official launch dates back to 2017, Chainlink has been experiencing a renaissance of late. For example, Chainlink recently partnered with Coinbase to offer pricing feeds for NFT collections. This opens the door for offerings like real-time NFT indexes and new NFT lending protocols that use NFTs as collateral for loans.

Taking a bigger-picture view of where Chainlink is headed in the future, Chainlink founder Sergey Nazarov recently said that his vision is for Chainlink to become "the AWS of Web3."  To make this vision a reality, Chainlink is now working with ex-Google CEO Eric Schmidt as a strategic advisor. At a recent conference in New York City, Schmidt and Nazarov discussed how real-time data could be turned into a premium product and monetized. All blockchains need off-chain data to execute smart contracts, and that's exactly the gap that Chainlink is trying to fill. The next time you see those fun, football-themed Amazon Web Services commercials featuring real-time data feeds, just think of a future in which those commercials are coming from Chainlink instead.

XRP

XRP, up 45% over the past 30 days, is the token of the Ripple payment and settlement network. Ripple has won kudos for its ability to send remittances cross-border with near-zero transaction costs. Think of it as a crypto version of Western Union. Until recently, the problem with XRP was that it was facing a massive lawsuit from the SEC over whether XRP was a "crypto" or a "security." The lawsuit has been hanging over XRP since 2020, which essentially put an artificial cap on the future price of this crypto.

But recent developments now suggest that a final settlement of the case is coming by year's end, which has made crypto investors euphoric. XRP has been used for years to facilitate cross-border payments. Sending remittances all over the world is big business in a globalized world, and XRP has already worked with some big-name financial partners in the past to make this as frictionless as possible.  There is now serious talk that XRP could double or triple in value once the lawsuit is behind it, based on its ability to continue business as usual. However, just keep in mind that this is a very speculative investment, similar to investing in a distressed company getting a sudden lifeline. There is a reason why XRP was trading for mere pennies until recently: There is still a chance that XRP could go to zero.

Is it finally altcoin season?

Altcoin season typically starts when a few altcoins start to decouple from Bitcoin, which has historically been the crypto market benchmark. If Bitcoin goes up, altcoins usually follow right behind. If Bitcoin goes down, altcoins also go down with the ship. But in altcoin season, a few coins start to buck the trend. They go up way more than Bitcoin. Or they go up even if Bitcoin goes down.

The three altcoins mentioned here have properties that differentiate them from Bitcoin. Algorand is a Layer 1 blockchain network that can host smart contracts and decentralized applications, similar to Ethereun. Chainlink is a provider of real-time off-chain data feeds, which is not available via Bitcoin. And XRP is a payment and settlement network. There are clear use cases for all of them, and the market is recognizing that.

All of these altcoins are a buy right now. However, just keep in mind that altcoins carry significantly more risk than the largest cryptos in the market. That's why I've focused on three altcoins with market capitalizations among the top 30, and all of which have been around since at least 2017. That should give you a certain margin of safety. So, sit back, sip your pumpkin spice latte, and enjoy the return of altcoin season. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post 3 altcoins to buy right now appeared first on The Motley Fool Australia.