Why Bitcoin, Ethereum and Solana jumped on Saturday
What happened
Weekends have been good for the cryptocurrency market recently, and today is no different. After a pop in values last saturdaythe move was repeated this weekend, with green across the market.
Starting at 9:00 a.m. ET, Bitcoin (CRYPTO: BTC) jumped 8.6% in the last 24 hours, Ethereum (CRYPTO:ETH) gained 5.9%, and Solana (CRYPTO: GROUND) was up 19%. These moves have slowed slightly and the tokens are now up 5.5%, 2%, and 6.9%, respectively, over the past day.
So what
The macro driver of the crypto movement is clearly the economic and monetary backdrop. Recent data has shown that inflationary pressures are easing, and there is speculation that the Federal Reserve will slow interest rate hikes in the coming months. Earnings season has also started and results have been strong for the banking sector. This drives investors back to higher risk assets, like crypto.
On Thursday night, we secured the long-awaited bankruptcy of crypto firm Genesis. This is certainly bad from a visibility standpoint for the crypto, but it also hasn’t caused much concern within the industry as withdrawals have been blocked since November.
The next shoe to drop could be Genesis parent company Digital Currency Group (DCG), which has run into its own funding issues related to illiquid assets and losses at FTX and the bankruptcy of Three Arrows Capital.
Investors like certainty, and while the Genesis bankruptcy isn’t good for the industry, it does bring more clarity to the situation. We also see less ripple effects from the bankruptcy of these companies. You may remember that Three Arrows Capital went bankrupt last summer, and it took months for that to lead to the collapse of FTX and the resulting drop in value of Solana.
Genesis and DCG going bankrupt or becoming a fraction of themselves are likely integrated into the market and don’t seem to have the same downstream effects on other companies.
While all this was going on, Solana, in particular, held up very well. The blockchain has actually become faster and more reliable, thanks to recent updates, and developers and users seem to be staying on the blockchain rather than leaving for alternatives.
Now what
The recent trading momentum is good news for crypto holders, but it might not last. Short moves are often driven by momentum and short cuts, including the liquidation of $385 million in short positions in the past 24 hours.
What encourages me is the level of blockchain activity on Ethereum and Solana in particular. Developers continue to build for the blockchain, and non-fungible token projects on both blockchains have captured market attention, including Checks on Ethereum and Claynosaurs on Solana.
As long as developers and entrepreneurs continue to build, these tokens will have increasing value around the world. But progress will be lumpy, as will the price of cryptocurrencies. I am optimistic about the future, but fully aware that volatility can easily drag the market down at any time.
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Travis Hoium has positions in Ethereum and Solana. The Motley Fool has positions and recommends Bitcoin, Ethereum, and Solana. The Motley Fool has a disclosure policy.
<p class="body__disclaimer">The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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