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Crypto stocks just rose overnight as the price of Bitcoin (BTC-USD) recovers some lost ground. The price of BTC is now up by about 10%, standing at around the $21,000 mark as of this writing.
So, which crypto stocks are now up today? Bitcoin miners Riot Blockchain (NASDAQ:RIOT), Marathon Digital (NASDAQ:MARA) and Hut 8 Mining (NASDAQ:HUT) all climbed more than 25% from their opening prices yesterday, although they have since pared back some gains. Likewise, crypto exchange Coinbase (NASDAQ:COIN) and MicroStrategy (NASDAQ:MSTR) — a software company with extensive holdings in BTC — climbed more than 15% from yesterday. Both of those companies are now up 5% and 7% as of this writing.
Here’s what investors should know as crypto stocks trend in the green today.
What’s Going on With Crypto Stocks?
Both macroeconomic trends and events specific to crypto are helping fuel this rally.
For one, hope for the U.S. economy and a rising stock market is aiding speculative stocks. A fall in the U.S. Dollar Index — which measures the value of the dollar against six other major currencies — is also helping. Rising stocks and a falling dollar are good news for alternative assets like cryptocurrency.
Some analysts warn, however, that Bitcoin is now down by two-thirds from its highs and that the current strength could be a bear market rally leading to another downturn. Crypto analyst Yuya Hasegawa says “too much optimism could be dangerous.”
That said, remarks from U.S. Securities and Exchange Commission (SEC) Chair and crypto skeptic Gary Gensler have also helped the market, according to Hasegawa. Gensler has come out in support of the Commodity Futures Trading Commission (CFTC) regulating BTC. Bitcoin futures are traded at the Chicago Mercantile Exchange (CME), outside the SEC’s authority. Crypto fans also recently demanded Gensler resign over crypto regulation.
Finally, Ethereum’s (ETH-USD) upcoming Merge upgrade — which will shift ETH to a proof-of-stake system — is bolstering crypto enthusiasm. Proof of stake is said to take less energy than the current proof-of-work system used by ETH and Bitcoin. That could make Ethereum more useful as a store of value. U.S. regulators have expressed concern that the energy required to mine and use Bitcoin contributes to pollution.
So, what happens next? Looking forward, cryptocurrency is still highly volatile and speculative. While Bitcoin and Ethereum are meant to trade as hedges against the dollar, they have traded like tech stocks throughout 2022. Investors should proceed with caution.
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On the date of publication, Dana Blankenhorn did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
