Why Celsius led crypto higher on Friday

What happened

The crypto market sprang to life on Friday, with values ​​rising quickly across the board. At noon ET, Ethereum (ETH 0.84%) was up 6.5% in the last 24 hours, Chain link (LINK 4.34%) was up 9.5%, Polka dot (DOT 4.18%) had risen 8.2%, and Celsius (CEL -1.71%) had jumped a whopping 31.7%.

One big piece of news affecting the markets today is the August jobs report, which showed an increase of 315,000 jobs on the payroll during the month. The number is the last major economic indicator before the Federal Reserve’s September meeting, and investors believe it likely means a 75 basis point increase in short-term interest rates this month.

So what

Celsius Network, which is behind the Celsius token and is also in bankruptcy, said it wants to release about $50 million in assets to customers. This is far below the $210 million in custody Celsius Network has, but was still seen as a positive sign.

The Bankruptcy Court for the Southern District of New York will consider the filing on October 6, and depositors are in limbo until then.

It is not entirely clear why the Celsius token is jumping on this news. The company is still in bankruptcy proceedings and is a long way from emerging with any kind of meaningful business, which would be necessary to add value to the token, but that has not stopped investors from buying the digital asset today.

Stocks are also rising today, which is often correlated with a rise in crypto values. Investors may see more clarity on the future of interest rates after the jobs report, although that likely means rates are heading higher in the near term.

What now

Crypto moves can be dramatic and volatile, and today’s move is no different. But I don’t see much changing the investment case in any of these cryptocurrencies in the long term. Celsius in particular still faces myriad issues arising from bankruptcy and has any value left for token holders. It can be positive that someone can get their money out, but it shouldn’t be a question in the first place from a loan company.

The shift to riskier assets is also helping crypto today, but it’s not going to add value in the long term. These blockchains need to see real businesses built, and that’s going to take a long time to do.

As bullish as I am on the future of cryptocurrencies, days like this aren’t necessarily a buying opportunity. Celsius seems to be pulling the market higher, but the bankruptcy of Celsius Network is a big black eye for the industry. It was off-chain risks that brought the company down, and it’s not clear how Celsius Network would clean up the business even if it emerged from bankruptcy in time.

I would call up today as normal volatility for the crypto market. A strong economy would be good for crypto and the future looks bright, but today was not driven by fundamental news.