Why cryptocurrencies are up again this weekend

What happened

Momentum continues to embed cryptocurrencies as investors look to alternatives to the traditional banking industry. Regulators and other banks may appear to argue in favor of crypto if a few merger rumors come true.

Most of the gains this week were led by the top cryptocurrencies, but now the second level is also jumping. At 10:00 a.m. ET, Ethereum (ETH 2.68%) is up 4.7% in the last 24 hours, Ethereum Classic (ETC 9.05%) is up 12.7%, Lido DAO (I DO 6.50%) has risen 11.8%, and Solana (SUN 8.84%) is up 7.9 percent.

So what

The general theme is the same as it has been all week. The collapse of two banks last weekend has prompted investors and traders to reassess the safety of bank deposits and look to alternatives such as cryptocurrencies. One of the cases against crypto has been that banks acted as a buffer and regulators have shut down banks with crypto ties or not allowed others to expand crypto offerings.

That task at least had some cold water poured on it in recent days. The FDIC said it is not preventing a buyer of Signature Bank from taking over the crypto business. Bids for both Signature and Silicon Valley Bank were reportedly due yesterday, and a buyer could emerge by the end of the weekend.

It’s ironic that big bank mergers can be good for crypto, but it makes some sense. If the only stable banks turn out to be the huge, systemically important banks, then what is the alternative? Cryptocurrencies seem to be a natural answer.

What now

Crypto has to answer what the on and off is to get money in and out of cryptocurrencies. Banks in the US aren’t exactly eager to either hold cryptocurrencies or allow crypto businesses as clients for fear of upsetting regulators. But around the world, the mood may be thawing.

While US regulators are fighting crypto, the UK and other major countries are building rules that will make crypto more stable. It can attract more users and add value to the ecosystem in the long term.

One of the reasons I think these tokens are up right now is that they provide more utility than just store-of-value tokens like Bitcoin. Ethereum can have smart contracts that will be valuable in an alternative financial ecosystem, and Lido DAO is a player that is part of the infrastructure of the ecosystem.

I think Solana is the most interesting crypto asset on this list. It can perform over 100 times more transactions per second than Ethereum and can also deploy smart contracts. If an alternative financial system is indeed what emerges after these bank collapses, Solana should play a major role.