Why Bitcoin, Ethereum and Solana are moving higher today

What happened

The crypto market was green on Tuesday morning ahead of key inflation data released on Wednesday, thanks to the price of Bitcoin (BTC 1.92%) pushing above $30,000, a level that the world’s largest cryptocurrency has not reached in about 10 months.

As of 9:54 a.m. ET Tuesday, the price of Bitcoin was up about 3.3% from where it stood late Monday afternoon. Meanwhile, the price is on Ethereum (ETH)which has the second highest market capitalization of any cryptocurrency, was up 1.4% higher, while the price of Solana (SUN 11.90%) had increased by almost 8%.

So what

Bitcoin is now up more than 81% this year. Rising interest rates have crushed the values ​​of cryptocurrencies over the past year, but they have started to rise on hopes that the Federal Reserve will soon pivot.

Image source: Getty Images.

A weakened dollar and the regional banking crisis have also sent investors back to crypto, which tends to do well when the mainstream financial system struggles. Some investors also believe that Bitcoin, which has been hovering around the $28,000 level for the past few weeks, has now broken through an important price point.

“The current price pattern is expected to generate a lot of attention as well as ‘fear of missing out’ among investors, many of whom have already missed out since the price has recovered its significant losses,” said Zaye Capital Chief Investment Officer Naeem Aslam. told a Barron’s reporter in an article published Tuesday morning. “It is conceivable that some profit-taking may occur at current levels, but given the momentum, it is extremely likely that the price will continue to rise.”

Another idea that seems to be gaining momentum among crypto buyers is that Bitcoin can serve as a hedge against difficult market conditions – a role similar to that traditionally played by gold. Some investors have previously theorized that Bitcoin, due to its limited supply, could be a hedge against inflation and act as a form of digital gold.

Analysts at Bernstein recently noted that when there is a “massive monetary degradation event” that leads to a rally in the price of gold, Bitcoin has actually outperformed the precious metal. In the three and a half years since the start of the pandemic, when the Fed began injecting trillions of dollars into the economy to support it through the crisis, Bitcoin has significantly outperformed gold, once again outperforming of the shorter time frame of the regional banking crisis.

Bitcoin is a catalyst for the entire cryptocurrency market and crypto-related stocks. When things are going well, investors pay more attention to the rest of the industry, as they appear to be doing on Tuesday.

What now

Bitcoin’s price rising above $30,000 is definitely the big story on Tuesday, but things could certainly change when new inflation data comes out on Wednesday. The Bureau of Labor Statistics will release the Consumer Price Index report for March at 8:30 a.m. ET, and it will be one of the last major events expected to affect crypto before the Fed’s May meeting.

Many investors still expect the Federal Open Market Committee to go ahead with a quarter-point rate hike in May, but if inflation data comes in much softer than expected, they could change course, although investors have been somewhat mixed in their response to economic data recently. Some are excited that a potential recession could prompt the central bank to go so far as to cut the federal funds rate, while others fear the effects of a hard landing on the economy.

Regardless, I think Bitcoin and Ethereum are the two best long-term cryptocurrencies to buy. Solana has certain technicalities that make it exciting as well, but I prefer the two biggest cryptocurrencies.