The Ethereum price just shot up 12%. Here's why

Investor risk appetite was spurred by Fed chair Jerome Powell's comments that the rate of future interest rate increases may soften.

| More on:
A person sitting at a desk smiling and looking at a computer.

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

Key points

  • The Ethereum price is leaping 12% higher
  • Cryptos are tracking a broader rally in risk assets
  • Investors took note of US Fed chair Jerome Powell’s comment that the central bank may slow the pace of monetary tightening following yesterday’s 0.75% rate hike

The Ethereum (CRYPTO: ETH) price is rocketing.

Ethereum is currently trading for US$1,613 (AU$2,303), up 12% since this time yesterday.

Over the past 24 hours, the world's No. 2 crypto has traded as high as US$1,637 and as low as US$1,424, according to data from CoinMarketCap.

The soaring Ethereum price has lifted the altcoin's total market valuation up to US$197 billion. Though it's worth noting that even with the latest leg up, the price remains down 67% from the 16 November all-time highs of US$4,892.

What's lifting the Ethereum price?

It's not just the Ethereum price that's off to the races today.

Of the top 100 cryptos only one – TerraClassic (CRYPTO: USD) – is in the red over the past 24 hours at the time of writing.

The broad rally follows in the footsteps of a stellar session on the tech-heavy Nasdaq Composite (NASDAQ: .IXIC) yesterday (overnight Aussie time), which closed up 4.1%.

Here in Australia, investor risk appetite also looks to have been spurred, with the S&P/ASX All Technology Index (ASX: XTX) up 1.2%, having earlier posted gains of 3.5%.

And if 2022 has demonstrated anything in the world of cryptos, it's that they've been moving closely in line with other risk assets, like high-growth tech shares.

"Crypto markets are very sensitive to US markets, in particular to monetary policy decisions from the Fed to combat rising inflation," said eToro's market analyst and crypto expert Simon Peters.

"The raising of interest rates and rising bond yields have affected US equity valuations and, by extension, crypto markets in recent months."

Why are risk assets rallying?

If the Ethereum price is shooting higher alongside a broader rally in risk assets, that begs the question, why are risk assets rallying?

The answer lies with the US Federal Reserve's 0.75% interest rate hike yesterday, the second consecutive outsized rate rise.

While rate increases often depress risk assets, investor sentiment was lifted by comments from Fed chair Jerome Powell, indicating that the pace of future rate hikes from the central bank may soften.

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Ethereum. The Motley Fool Australia has positions in and has recommended Ethereum. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Cryptocurrencies

A man holding a mobile phone walks past some buildings
Cryptocurrencies

The Betashares Crypto Innovators ETF (CRYP) is up 37% in a month. Is it too late to buy?

Looking at the CRYP ETF? Here's my take on whether it's too late to buy.

Read more »

Bitcoin ETF digital illustration.
ETFs

Why is the BetaShares Crypto Innovators ETF (CRYP) surging on Thursday?

Some massive Bitcoin news is lifting this ETF today.

Read more »

A woman holds a bitcoin token in her hand as she smiles at the camera in the background.
Cryptocurrencies

Bitcoin ETF approved. When is it coming to Australia?

Crypto bulls will be celebrating this milestone moment.

Read more »

person dancing in bitcoin spectacles wearing a gold outfit with hands up.
Cryptocurrencies

Bitcoin price rockets to 21-month highs. Here's why

The Bitcoin price is now up more than 174% in 12 months.

Read more »

BTC spelt out on wooden blocks with a red sign going down.
Cryptocurrencies

Bitcoin price sinks from 21-month high as ETF rumours swirl

What's going on with this cryptocurrency this week?

Read more »

person dancing in bitcoin spectacles wearing a gold outfit with hands up.
Cryptocurrencies

Up 145% in a year, the Bitcoin price just smashed through 18-month highs!

After a horror year in 2022, the Bitcoin price has come roaring back in 2023.

Read more »

Two investors look at a graphic showing a bitcoin in the centre
Cryptocurrencies

Why did the Bitcoin price just hit a 17-month high?

The long-standing cryptocurrency is finding its feet to reclaim a price not seen since May 2022.

Read more »

ETF written in gold with dollar signs on coin.
ETFs

This ASX ETF is up 21% in April so far

How on earth has this ETF smashed the market by a factor of 10?

Read more »