Why Cryptocurrencies Like Bitcoin and Ethereum Surged Today

What happened

Thursday was a fine day for cryptocurrencies nearly across the board, with the sector’s leaders driving the rally. No. 1 and No. 2 — respectively, Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH) — were trading around 3% higher over the 24 hours preceding late afternoon.

As the top dogs go, the remaining pack typically follows, so a host of other coins, tokens, and related assets also moved higher, albeit at different paces. Fellow crypto Aave (CRYPTO: AAVE) was enjoying a nearly 9% surge, while miner Riot Platforms (NASDAQ: RIOT) was defying gravity at a nearly 5% clip.

So what

The trajectory of cryptocurrencies (and stocks closely tied to them, like Riot Platforms) frequently depends on the performance of low-risk assets. When the latter start to weaken, this emboldens certain investors to stack up on the riskier goodies, and coins and tokens are still considered to be model high-risk plays.

On Thursday, those safe havens weren’t looking infallible. The yield on the benchmark 10-year U.S. Treasury bond, considered by many to be the most secure investment on the scene, weakened from a 16-year high on Thursday.

Meanwhile, everybody’s favorite fossil fuel investment, crude oil, also saw a price retreat (in its case, from year-to-date highs). Finally, the reserve currency of this planet (the U.S. dollar) lost a bit of its value too.

These weren’t the only factors driving Bitcoin, Ethereum, and their many relatives higher on the day.

In a post on X (formerly Twitter) late Wednesday, Bloomberg reporter Eric Balchunas wrote that the Securities and Exchange Commission (SEC) is making moves to accelerate the rollout of certain Ethereum exchange-traded funds (ETFs). Specifically, according to Balchunas, the SEC has requested ETF filers to update their applications in an effort to get those instruments up and running for trading next week.

While this apparently only concerns Ethereum ETFs, it’s easy to imagine that if the regulator is ready to turn on the light for that crypto, it’s ready to do so for a host of other coins and tokens. There still is much crypto resistance in official corners — particularly at the SEC, ahem — but at least to some degree, it seems to be melting a bit.

Now what

Other factors playing in the background are also contributing to the current crypto bullishness. The equity market continues to be generally frothy, which not only fuels optimism for riskier assets but also gets investors to consider non-stock plays like cryptocurrencies. Interest rates remain relatively high and look set to stay that way for some time or even rise. So, we likely haven’t seen the last good day for coins and tokens.

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Eric Volkman has positions in Bitcoin and Ethereum. The Motley Fool has positions in and recommends Aave, Bitcoin, and Ethereum. The Motley Fool has a disclosure policy.

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