It hasn't just been the Australian share market bouncing back today, cryptocurrencies have made an almighty comeback as well. And few more so than the world's second-largest cryptocurrency Ethereum (ETH).
At the time of writing the Ethereum price is up 20% over the last 24 hours to US$735.01, according to Coin Market Cap. This gives ETH a market capitalisation of US$71.6 billion.
It isn't the only cryptocurrency posting notably strong gains today. Seven out of the top ten cryptos are currently at least 20% higher than this time yesterday as trader sentiment turns positive.
This includes a 20% gain by Cardano (ADA), a 41% push higher by NEO (NEO), and a 23% increase by Stellar Lumens (XLM). Bitcoin (BTC) has been a bit of a laggard with a 17% move higher US$7,362.
What has changed?
Today's gains appear to be related to news out of the U.S. Commodity Futures Trading Commission (CFTC) this morning.
According to a press release by the Senate Banking Committee, J. Christopher Giancarlo, chairman of the CFTC, told the Committee that the emergence of cryptocurrencies was similar to the rise of the internet in the 1990s.
He concluded that:
"We are entering a new digital era in world financial markets. As we saw with the development of the Internet, we cannot put the technology genie back in the bottle. Virtual currencies mark a paradigm shift in how we think about payments, traditional financial processes, and engaging in economic activity. Ignoring these developments will not make them go away, nor is it a responsible regulatory response. The evolution of these assets, their volatility, and the interest they attract from a rising global millennial population demand serious examination. With the proper balance of sound policy, regulatory oversight and private sector innovation, new technologies will allow American markets to evolve in responsible ways and continue to grow our economy and increase prosperity."
What does this mean?
I believe traders are interpreting this as a sign that U.S. regulators won't ban cryptocurrencies altogether, but rather look to develop policies that regulate them and allow them to flourish.
Whilst this certainly would make them a far better investment proposition in the future, I wouldn't necessarily be rushing in to buy them just yet and suspect that the next few days of trade could continue to be highly volatile.
