Why Bitcoin, Ethereum, and Solana Are Growing Today [Advance Cash ]

Why Bitcoin, Ethereum, And Solana Are Growing Today

What happened

The crypto market was green Tuesday morning ahead of key inflation data due Wednesday, and thanks to the price of Bitcoin (BTC 1.41%) pushing above $30,000, a level the world's largest cryptocurrency hasn't reached in about 10 months.

As of 9:54 a.m. ET on Tuesday, the price of Bitcoin was up around 3.3% from Monday afternoon. Meanwhile, the price of Ethereum (ETH -0.11%)which has the second-highest market cap of any cryptocurrency, rose 1.4%, while the price of Solana (FLOOR 10.90%) increased by nearly 8%.

So what

Bitcoin is now up over 81% this year. Rising interest rates have crushed cryptocurrency values ​​over the past year, but they have started to rally on hopes that the Federal Reserve will soon pivot.

Image source: Getty Images.

The weakening dollar and regional banking crisis have also sent investors back to crypto, which tends to do well when the traditional financial system is struggling. Additionally, some investors believe that Bitcoin, which has been hovering around the $28,000 level for the past few weeks, has now breached a key price level.

"The current price pattern is expected to generate a lot of attention, as well as 'fear of missing out' among investors, many of whom have already missed the price as the price has regained its significant losses," said Naeem Aslam, Director investments from Zaye Capital. said one barrons journalist in an article published Tuesday morning. “It is very conceivable that some profit taking could occur at the current level, but given the momentum, it is extremely likely that the price will continue higher.”

Another idea that seems to be picking up steam among crypto buyers is that Bitcoin can act as a hedge against difficult market conditions – a role similar to that traditionally played by gold. Some investors in the past have promoted the theory that Bitcoin, due to its limited supply, can be an inflation hedge and act as a form of digital gold.

Bernstein analysts recently noted that when there is a “massive currency debasement event” that leads to a rise in the price of gold, Bitcoin has actually outperformed the precious metal. In the three and a half years since the start of the pandemic, when the Fed began injecting trillions of dollars into the economy to support it through the crisis, Bitcoin has significantly outperformed gold, and it outperformed again during the shorter period of the regional banking crisis.

Bitcoin is a catalyst for the entire cryptocurrency market and crypto-related stocks. When it is doing well, investors pay more attention to the rest of the industry, as they seem to be doing on Tuesday.

Now what

Bitcoin's price surge above $30,000 is certainly the big story on Tuesday, but things could certainly change when new inflation data comes out on Wednesday. The Bureau of Labor Statistics will release the Consumer Price Index report for March at 8:30 a.m. ET, and it will be one of the last big events expected to impact crypto ahead of the May meeting of the fed.

Many investors still expect the Federal Open Market Committee to follow up with a quarter-point interest rate hike in May, but if the inflation data is much weaker than expected, they could change course, although investors were a little mixed in their responses. to economic data recently. Some are happy that a possible recession could prompt the central bank to go so far as to cut the federal funds rate, while others fear the effects of a hard landing in the economy.

Anyway, I think Bitcoin and Ethereum are the two best long-term cryptocurrencies to buy. Solana has some technical abilities that also make it intriguing, but I prefer the two biggest cryptocurrencies.

Bram Berkowitz has positions in Bitcoin and Ethereum. The Motley Fool has positions and recommends Bitcoin, Ethereum, and Solana. The Motley Fool has a disclosure policy.