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Are the prices of altcoins ever going to obey gravity? An investor could be forgiven for thinking they'll continue to rocket into space indefinitely, as the long rally in their prices got even longer this week. While not every altcoin enjoyed such a rocket ride, more than a few ballooned in price.

For example, according to data compiled by S&P Global Market Intelligence, BNBsaw a double-digit gain rising by 16% over the period. Ditto for multiverse digital currency MultiversXand transaction bundling-chain Optimism'stoken, both of which advanced by the same percentage. A near double-digit gainer was Theta Network, with its nearly 10% increase.

Numerous factors were behind the continued rise of altcoins, but perhaps the most significant one is reallocation. Data crunched by crypto-trading analysis platform developer Coinalyze from January 2022 to the present revealed sharp gains in open interest (the number of trades that have not yet been closed) for altcoins, with a corresponding drop in that for the original and most popular crypto, Bitcoin (BTC 0.70%).

Compounding this, Bitcoin's price saw a bit of a jump mid-week. One of the coin's most prominent bulls, MicroStrategy (MSTR -5.43%) co-founder and board chairman Michael Saylor, announced that his company had made the latest in a series of big Bitcoin investments. This one totaled almost $616 million, more than enough outlay to push almost any asset's price higher.

As often happens with assets hit with a sudden and substantial event, Saylor's piece of news was a sugar high that couldn't last. Following this, investors took profits, and the Bitcoin price subsequently retreated. That only made altcoins more attractive for many investors, and the rally continued.

Of course, no cryptocurrency would be popular if the macroeconomic environment was unfavorable. The latest inflation figures released by not only our government but also those abroad -- we're looking at you, U.K. -- seem to indicate that price rises are cooling. This makes the long-hoped-for interest rate cuts more likely in the new year, and lower rates tend to inspire the market to chase riskier investments -- like cryptos.

This rally has quite a long tail by now, though, so investors must be cautious in this current environment. That is especially true for the more obscure and volatile altcoins, more than a few of which anchor blockchains with little to no practical value (meme coins, anyone?). Now is the time to be careful, not casually greedy.

Eric Volkman has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool recommends Theta Token. The Motley Fool has a disclosure policy.

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Why Altcoins Zoomed Higher Again This Week - The Motley Fool