Why did Bitcoin, Ethereum, and Solana all rise on Saturday?
Weekends have recently proven beneficial to the bitcoin market, and today is no exception. Following a surge in values last Saturday, the trend has been replicated this weekend, with green dominating the market.
Bitcoin (CRYPTO: BTC) was up 8.6% in the previous 24 hours as of 9:00 a.m. ET, Ethereum (CRYPTO: ETH) was up 5.9%, and Solana (CRYPTO: SOL) was up 19%. These gains have slowed slightly, and the tokens are currently up 5.5%, 2%, and 6.9% in the last day, respectively.
So, what now?
The economic and monetary background is the macro driver of the crypto rise. Recent statistics suggest that inflationary pressures are receding, and the Federal Reserve is expected to pause interest rate rises in the coming months. Earnings season has now begun, and the financial industry has had solid results. As a result, investors are returning to higher-risk assets such as cryptocurrency.
On Thursday night, the long-awaited bankruptcy of crypto company Genesis occurred. This is undoubtedly negative for crypto's exposure, but it hasn't prompted much alarm within the sector because withdrawals have been frozen since November.
The next shoe to drop might be Genesis' parent firm, Digital Currency Group (DCG), which has its financial concerns due to illiquid assets and losses from the bankruptcies of FTX and Three Arrows Capital.
Investors value predictability, and while Genesis' bankruptcy is bad for the sector, it does provide greater transparency. We are also witnessing fewer spillover consequences from these bankruptcies.
Three Arrows Capital went bankrupt this summer, and it took months for it to lead to the collapse of FTX and the subsequent drop in Solana's value.
Going bankrupt or becoming a fraction of themselves is likely priced into the market and does not appear to have the same downstream impacts on other firms as Genesis and DCG.
Throughout all of this, Solana, in particular, has performed well. Thanks to recent enhancements, the blockchain has become quicker and more trustworthy, and both developers and consumers appear to be sticking to the blockchain rather than looking for alternatives.
The current trade surge is encouraging for cryptocurrency investors, but it may not remain. Momentum and short squeezes often drive short moves, such as the liquidation of $385 million in short holdings in the previous 24 hours.
What inspires me is the volume of blockchain activity on Ethereum, particularly on Solana. Developers continue to create for the blockchain, and non-fungible token projects on both blockchains, such as Checks on Ethereum and Claynosaurs on Solana, have attracted the market's interest.
As long as developers and entrepreneurs continue to build, the value of these tokens will rise. However, the development will be uneven, much like the price of cryptocurrencies.