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what happened
Recent weekends have been favorable for the cryptocurrency market, and today is no exception. After a surge in prices last Saturday, the move has been repeated this weekend, leaving the entire market green.
As of 9:00 AM ET, Bitcoin (Bitcoin 1.60%) jumped 8.6% in the last 24 hours ethereum (ETH -1.25%) increased by 5.9%, Solana (sol -0.08%) It was up 19%. These moves have slowed slightly, with tokens up 5.5%, 2% and 6.9% respectively on the final day.
So what
The macro driver of the crypto movement is clearly the economic and financial background. Recent data show inflationary pressures are easing, and there is speculation that the Federal Reserve will slow rate increases in the coming months. Earnings season has begun and the banking industry is performing well. As such, investors are flocking to risky assets like cryptocurrencies.
Thursday night saw the long-anticipated bankruptcy of cryptocurrency company Genesis. While this is certainly bad from a cryptocurrency visibility perspective, it has not caused much concern within the industry as withdrawals have been locked since November.
The next drop could be Genesis’ parent company, Digital Currency Group (DCG). DCG faces its own funding issues related to illiquid assets and losses from the bankruptcies of FTX and Three Arrows Capital.
Investors love certainty. The Genesis bankruptcy isn’t good for the industry, but it makes the situation clearer. There are also less ripple effects from these companies going bankrupt. You may remember that Three Arrows Capital went bankrupt last summer. That led to the collapse of FTX, and it took several months before Solana’s value plummeted.
Genesis and DCG going bankrupt or becoming part of their own company is likely priced into the market and doesn’t seem to have a similar impact on other businesses.
While all of this is going on, Solana in particular has held up quite well. It seems to be staying on the blockchain rather than leaving.
So
The recent trading momentum is welcome news for cryptocurrency holders, but it may not last long. Short movements are often driven by momentum and short squeezes, such as the liquidation of his $385 million short position in the last 24 hours.
What I am encouraged by is the level of blockchain activity, especially on Ethereum and Solana. Developers continue to build for blockchains, with irfungible token projects such as Ethereum’s Check and Solana’s Craynosaurus garnering market attention on both blockchains.
As long as developers and entrepreneurs continue to build, these tokens will become more and more valuable to the world. But just like cryptocurrency prices, progress will be bumpy. While I am bullish about the future, I am fully aware that volatility could easily bring the market down in no time.
Travis Hoium has positions on Ethereum and Solana. The Motley Fool has positions in and recommends Bitcoin, Ethereum and Solana. The Motley Fool’s U.S. headquarters has a disclosure policy.
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