Why Bitcoin, Ethereum, Cardano, and Coinbase Are Soaring Again | The Motley Fool

What happened

The crypto market is having a great day on Tuesday. Just after 2 p.m. Here's a sampling of some leading names, but dozens of altcoins saw similar price increases.

Data from Coingecko.com, reflecting 24-hour price changes as of 2 pm ET, March 14, 2023.

The growing cryptocurrency market also fueled many stocks with close ties to the sector. For example, the shares of the main crypto exchanges coin base (CURRENCY 3.22%) it rose as much as 11.9% on Tuesday before settling back to a 5.9% gain at the close of the trading session.

So what

There are a lot of crypto-related balls in the air right now. Future historians will probably write books about this week in blockchain history. At the very least, you'll see chapters about it in manuals about the early days of cryptocurrency investing. This short news roundup does not aim for that kind of outreach. Instead, here are some of Tuesday's game-changing highlights, in no particular order:

• the eruption of bank runs and bank collapses hit the cryptocurrency sector hard last week as numerous cryptocurrency and stablecoin exchanges had active trading relationships with the failed banks. This week, investor fears were largely allayed after regulators vowed to protect customer account balances of failing banks.
• The banking crisis may inspire the Federal Reserve to change gears in its efforts to fight inflation. In light of the difficulties in the banking sector amid rising benchmark interest rates, the agency could accept higher inflation in exchange for lower risk of more financial institution collapses. The next rate-setting meeting of the Federal Open Market Committee is scheduled for March 22. The recent crypto bullishness suggests that many traders are now expecting a smaller interest rate hike than before, or perhaps even no rate hike at all at all. Lower interest rates would be good news for the supporting cast of the crypto market and also for the digital currencies themselves.
• Tuesday morning's Consumer Price Index report was in line with expectations, showing inflation cooled slightly in February. That's another data point that could lead to lower interest rate hikes thwarting inflation, next week and beyond.

Now what

Tuesday's jumps added to the momentum these cryptocurrencies built up over the weekend. Cardano is up 17% in two days, Ethereum is up 18% over the same period, and Bitcoin is up 23%.

This is not a full recovery from the pains of 2022. Ethereum is trading at prices last seen last August and Bitcoin's rebound has brought it back to the levels it previously slid through in June. Coinbase and Cardano, by contrast, have only returned to the price levels of last week.

All of these tokens have a long way to go before they can set new all-time highs again. The Federal Reserve could provide fuel for those fires next week, raising cryptocurrency prices by offering a small interest rate hike or forgoing one, but it would likely take a lot more to spur that kind of response. I am referring to progress towards a stronger regulatory framework for cryptocurrency trading and ownership, along with a variety of consumer-ready applications and services in the cryptocurrency-based financial sector.

These events are not likely to be the spark that reignites the crypto market's moon rockets. Call it a dress rehearsal for the actual surge, or maybe even a fake head before the next plunge. Always in motion is the crypto future. Stay tuned for more drama and feel free to make some modest investments in this volatile sector. Just be prepared for a plethora of speed bumps and potholes in the road ahead.

Anders Bylund He has positions in Bitcoin, Cardano, Coinbase Global, and Ethereum. The Motley Fool has positions and recommends Bitcoin, Cardano, Coinbase Global, and Ethereum. The Motley Fool has a disclosure policy.