Why is crypto up today?

Crypto climbs higher on Tuesday. As might be expected, Ethereum (ETH-USD) and Bitcoin (BTC-USD) is helping to lead the charge. They are up 9% and 3.5% respectively so far today. But this has investors asking a simple question: Why is crypto up today?

It appears that there are several catalysts for the recovery.

First, we cannot ignore the rally in US stocks. While cryptos do not have a 1:1 correlation with US stocks, they tend to trade in similar directions.

Furthermore, many investors believed that Bitcoin would be a good hedge against inflation. Maybe it was, if you count the high-growth stock rally in 2020 and part of 2021 as an inflation trade. Otherwise, it turns out that Bitcoin – and thus crypto – has a higher correlation to growth stocks than it does to inflation readings.

So why is crypto up Today? A rally in tech stocks and, perhaps just as importantly, a decline in the US dollar help trigger a “risk-on” rally and make other assets more attractive. Thus, crypto is on the move higher.

So why is crypto up today?

The rise in US stocks and asset risk is just one reason why crypto is rising on the day. The second reason is much more direct. Legislators in the UK have voted to recognize crypto as “regulated financial instruments.”

While we may not ditch the US dollar or any other major currency in favor of a cryptocurrency, the UK’s decision lends legitimacy to the asset class.

“The substance here is to treat [cryptocurrencies] like other forms of financial assets and not to prefer them, but also to bring them within the scope of regulation for the first time, said MP Andrew Griffith, as reported by Coindesk.

The vote passed the House of Commons, which is the lower house of Parliament. Before it can become law, it must then be voted for by the House of Lords, which is the upper house of Parliament. Finally, “the changes are given a final review followed by royal assent by King Charles III.”

Furthermore, following Liz Truss’ exit last week, Rishi Sunak has been chosen as the country’s next Prime Minister.

Sunak previously served as the Chancellor of the Exchequer – the Chancellor of the Exchequer – and was pro-crypto during his time in the post, which lasted from February 2020 to July 2022. During his time in the role, Sunak “wanted to make the UK a crypto hub.”

Putting all these catalysts together has really helped crypto, especially on Tuesday.

As of the date of publication, Bret Kenwell did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to the InvestorPlace.com Publishing Guidelines.