Why Bitcoin, Ethereum and Solana emerged on Saturday

What happened

Weekends have been good for the cryptocurrency market lately, and today is no different. After a pop in values ​​last Saturday, the move has been repeated this weekend, with green across the market.

Starting at. 9 a.m. ET, Bitcoin (BTC -3.93%) has jumped as much as 8.6% in the last 24 hours, Ethereum (ETH -4.42%) increased 5.9%, and Solana (SUN -5.42%) was up 19%. These moves have trailed off a bit and the tokens are now up 5.5%, 2% and 6.9% respectively in the last day.

So what

The macro driver of the crypto movement is clearly the economic and monetary backdrop. Recent data have shown that inflationary pressures are easing, and there is speculation that the Federal Reserve will slow rate hikes in the coming months. The earnings season has also started, and the results have been strong for the banking industry. That’s causing investors to flock back to higher-risk assets, like crypto.

We got the long-awaited bankruptcy of crypto firm Genesis on Thursday night. This is certainly bad from a visibility standpoint for crypto, but it also hasn’t caused much concern in the industry because withdrawals have been locked since November.

The next shoe to drop could be Genesis’ parent company, Digital Currency Group (DCG), which has run into its own funding problems related to illiquid assets and losses from FTX and Three Arrows Capital going bankrupt.

Investors like certainty, and while Genesis’ bankruptcy is not good for the industry, it brings more clarity to the situation. We also see fewer ripple effects from these businesses going bankrupt. You may recall that Three Arrows Capital went bankrupt last summer, and it took months to lead to FTX’s collapse and the resulting plunge in Solana’s value.

Genesis and DCG going bankrupt or becoming a fraction of themselves are likely priced into the market and don’t appear to have the same downstream effects on other businesses.

While all this has been going on, Solana in particular has held up extremely well. The blockchain has actually become faster and more reliable, thanks to recent upgrades, and both developers and users seem to be sticking to the blockchain rather than going for alternatives.

What now

The recent trading momentum is welcome news for crypto holders, but it may not last. Short moves are often driven by momentum and short squeezes, including the liquidation of $385 million of short positions in the past 24 hours.

What I am encouraged by 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 caught the market’s attention, including Checks on Ethereum and Claynosaurs on Solana.

As long as developers and entrepreneurs continue to build, these tokens will have increasing value in the world. But progress will be lumpy, just like the price of cryptocurrencies. I am optimistic about the future, but fully aware that volatility can easily bring the market down at a moment’s notice.