Why Bitcoin, Ethereum, Dogecoin, and Solana All Popped Today

What happened

After a rough start to the year, the cryptocurrency market jumped early Wednesday as the markets rallied and fears about the Federal Reserve dropping surprises in the market after President Jerome Powell’s testimony before Congress.

dollar price Bitcoin (CRYPTO: BTC) It is up 3.2% in the last 24 hours as of 1 PM ET after jumping 4%. Ethereum (CRYPTO: ETH) It rose as much as 5.4% and is currently at 5.2%, Solana (CRYPTO: SOL) It popped 8.1% and is currently 7.7%, while Dogecoin (CRYPTO: DOGE) It rose 7.2% and is at its highest as of this writing. This doesn’t get what it lost so far this year, but it’s a good start for crypto investors.

Image source: Getty Images.

so what

The bullish movement of the major cryptocurrencies started early this morning and continued across most of the market. This may just be a follow-up to the stock market, which rose a bit today and was also higher yesterday along with the cryptocurrency market.

We started getting some data on the bigger moves in the market in early January and this explains why the market has been down so far this year. According to CoinShares, net outflows from crypto investment products reached $207 million in just the first week of January, which likely explains some of the drop in values.

Bitcoin price chart

Bitcoin price data by YCharts

The outflows along with liquidations of leveraged trades can cause the value of cryptocurrencies to drop rapidly. All of these factors seem to happen at once at the beginning of the year.

One of the biggest reasons for the overall market rally is the fact that Federal Reserve Chairman Jerome Powell has indicated in Congressional testimony that the central bank will try to balance jobs and economic growth with the need to bring down inflation. Markets were surprised last week when the minutes of the Federal Reserve’s December meeting showed its desire to raise interest rates early this year to combat inflation. Powell said he does not want inflation to become entrenched, but he also said that economic growth is important when looking at the speed of rate increases.

What now

Cryptocurrency markets tend to amplify stock market moves and today is no different. the Standard & Poor’s 500 And Nasdaq Composite Less than 0.5%, but this move is much larger even for the largest cryptocurrencies.

We may also see some buyers entering the market who were looking for a buying opportunity and see the price drop as a good entry point.

With all that said, investors should expect the cryptocurrency market to continue to be volatile as it matures. We are still very speculative for the industry as utility is built on top of cryptocurrencies, but in the long run I still love the disruptive nature of the industry.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of the Motley Fool Premium Consulting Service. We are diverse! Asking about an investment thesis — even if it’s our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.