Why Bitcoin, Ethereum, and crypto stocks are soaring

The crypto market enjoyed several items of market-moving news from Malaysia.

| More on:
three large bitcoin tokens appear against the backdrop of a Malaysian flag.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

What happened

Many cryptocurrencies and crypto-related stocks posted sharp price gains on Tuesday. Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH) saw 24-hour gains of 3.9% and 3.2%, respectively, at 2 p.m. ET today. Leading cryptocurrency trading service Coinbase Global (NASDAQ: COIN) held a 7.2% price increase at the same time, while the crypto-focused bank Silvergate Capital (NYSE: SI) was up 5.6%.

It's no surprise to see the biggest names in cryptocurrency jumping today because they were fueled by a handful of bullish news items.

So what

First and foremost, cryptocurrencies took another meaningful step toward the mainstream economy. A leading Malaysian government official asked his country to elevate cryptocurrencies to a form of legal tender.

Malaysia's deputy minister of communications and multimedia Zahidi Zainul Abidin addressed the country's parliament on Monday, asking legislators to accept Bitcoin and other digital coins in addition to the Malaysian ringgit. The government started kicking the tires of a state-backed cryptocurrency in January, but Abidin's request could broaden that review into raising the legal status of many existing cryptocurrencies.

Malaysia could become the second nation to take this step, following El Salvador's policy of accepting Bitcoin payments in addition to the U.S. dollar. Malaysia has a larger population and economy than El Salvador. Hence, whatever happens in Malaysia is more likely to move the needle for Bitcoin and other crypto names in the long term. That being said, Malaysia's cryptocurrency review is still in its early stages, while El Salvador has already taken the Bitcoin leap.

Furthermore, Malaysia is working with the governments of Australia, Singapore, and South Africa to set up an international payment system involving digital assets issued by each country's central bank. The panel considering this idea issued a report on Tuesday morning, saying that a prototype platform for border-crossing digital payments is "technically viable". Similar reviews are also taking place in important markets such as Switzerland and Hong Kong.

Ethereum rode along on Bitcoin's gains to some degree. At the same time, the smart-contract platform continued to burn tokens as it moves closer to a long-awaited technical upgrade. The next-generation Ethereum system will be faster and leaner, moving from the power-hungry proof-of-work architecture to the environmentally friendly proof-of-stake alternative, and the inflationary creation of new Ether tokens will drop by 90%. Several popular media outlets picked up on Ethereum's progress on Monday afternoon, throwing fuel on the digital currency's fires.

When Bitcoin and Ethereum are up, Silvergate and Coinbase are sure to follow. That's not always the correct market reaction, since both companies are more interested in cryptocurrencies seeing high trading volumes than high coin prices, but that's life on Wall Street. The reasons behind each price move might not always make sense in the short run, though the market tends to be a very fair system of value assessments in the long run.

Now what

Tuesday's respectable price surge will not completely make up for the crypto market's weakness in recent months -- not by a long shot. Every security and digital coin mentioned above is still down by 27% or more since the slide began in mid-November. By comparison, the S&P 500 market index has lost only 3% of its value over the same period:

SI Chart

SI data by YCharts.

In other words, prices are still low, and long-term cryptocurrency bulls should see a solid buying opportunity in this long-lived market dip. You won't even remember the single-digit gains you missed on Tuesday in the context of much greater gains in the long run.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Anders Bylund owns Bitcoin, Coinbase Global, Inc., and Ethereum. The Motley Fool owns and recommends Bitcoin, Coinbase Global, Inc., and Ethereum. The Motley Fool recommends Silvergate Capital Corporation. The Motley Fool has a disclosure policy.

More on International Stock News

Red arrow going down, symbolising a falling share price.
International Stock News

Why Amazon shares fell 12% in June

The online retailer and cloud computing expert largely rode the broader market's waves last month. The loudly touted stock split…

Read more »

A male executive worker wearing glasses and a blue collared shirt looks at his laptop screen with a concerned look on his face and his hand to his forehead as he watches the Bank of Queensland share price fall
International Stock News

Why Alphabet stock crashed 25% in the first half of 2022

Even mighty tech titans were doled out their fair share of market punishment.

Read more »

Woman on her laptop thinking to herself.
International Stock News

How far could the stock market fall? 2 indicators may hold the answer

These indicators suggest we're quite a ways from reaching a bottom.

Read more »

Red arrow going down and symbolising a falling share price.
International Stock News

Why shares in Berkshire Hathaway fell in June

The month marked a reversal of fortune for Warren Buffett's investment company.

Read more »

a man sits with his head in his hand, looking quite dejected, as he holds a rubber tipped pen on the screen of a computer showing a graph trending downwards.
International Stock News

Is it safer to pull your money out of the stock market or keep investing for now?

Most investors should avoid selling in a bear market.

Read more »

A Chinese investor sits in front of his laptop looking pensive and concerned about pandemic lockdowns which may impact ASX 200 iron ore share prices
International Stock News

Headwinds will slow growth for Meta; Should investors sell now?

This former trillion-dollar company's value has been slashed by more than half.

Read more »

Red arrow crashing in the ground with a Bitcoin token next to it.
International Stock News

Why Bitcoin stocks crashed (again) last month

The original cryptocurrency is still suffering under economic pressure, dragging several crypto-oriented stocks along with it.

Read more »

two colleagues high five each other as they sit side by side at a long desk in front of their laptop computers in an office environment.
International Stock News

5 surefire investments you’ll thank yourself for later

Investing in skills, knowledge, and relationships is just as important as the investments you make in your portfolio.

Read more »