Why Bitcoin, Ethereum, and Dogecoin Are Rising Today

What happened

Many cryptocurrencies turned positive over the past 24 hours and this morning as investors shrugged off regulatory issues in the sector and looked to a Federal Reserve central bank.

Since late yesterday afternoon, the price of the world’s largest cryptocurrency, Bitcoin (BTC 5.38%)was trading 3.8% higher as of 9:40 a.m. ET, hovering around $28,425. Meanwhile, the price of the world’s second largest cryptocurrency, Ethereum (ETH 3.59%)traded almost 2% higher and the price of the meme token Dogecoin (DOGE 4.01%) was up 2.7 percent.

So what

The crypto industry has come under a lot of pressure on the regulatory front recently. Two of the main banks serving the sector, Silvergate capital and Signature banknow no longer does so and has either been acquired or plans to wind down the business.

Image source: Getty Images.

Meanwhile, the major US crypto exchange Coinbase Global recently received a Wells notice, which means the Securities and Exchange Commission (SEC) is considering issuing an enforcement action against the company.

Even more recently, the major crypto exchange Binance and its co-founder Changpeng Zhao have been investigated by the Commodity Futures Trading Commission (CFTC), which claims that Binance violated the Commodity Exchange Act and did not do enough “to prevent and detect money laundering and the financing of terrorism.” “

Investors appear more excited about the potential for a Fed pivot after the Fed at its March meeting raised interest rates by a quarter point and took a much more dovish tone. Fed Chairman Jerome Powell said a tightening of credit in the banking system is likely to occur after several bank failures recently, and this could end up doing some of the Fed’s work for it in curbing inflation.

Many traders are now betting that the Fed will cut interest rates by September, and a healthy number also see a rate cut as possible by July. Cryptocurrencies have been crushed by higher interest rates, making riskier assets like crypto much less appealing, so an earlier pivot looks set to excite the market. Even just holding interest rates on hold would be an improvement from the Fed’s previous outlook, which looked like the agency could raise rates closer to 6%.

What now

Betting on interest is a difficult game and I would not recommend it. After all, not everyone expects an interest rate cut. Strategists from Black stone don’t think the Fed will end up cutting interest rates this year because it wants lower growth or a recession to continue bringing down inflation.

Still, the outlook for prices is certainly much better than it was before this banking crisis, which helps the outlook for crypto.

I think Bitcoin and Ethereum will be here for a long time and will probably appreciate, so I see these tokens as good long-term buys. That said, I don’t have much interest in too many other cryptocurrencies right now like Dogecoin.