Two Reasons for the Crypto Rally
Amanda Heckman|August 13, 2022
The stock market cheered the news that inflation ticked ever so slightly down in July.
The prospect of less Fed intervention sent stocks higher…
And the crypto market, too, sighed in relief.
But there was a crucial difference between the reactions of the two asset classes.
While the S&P 500 jumped on the inflation news Wednesday morning… it remained flat for the rest of the day and through Thursday.
The crypto market, however, jumped on Wednesday… and didn’t stop there.
It isn’t just inflation news that is giving crypto a lift…
Bullish news is turning the market around… and giving investors a big opportunity.
Last week, we told you how BlackRock – the world’s largest investment manager, with $10 trillion in assets – had teamed up with Coinbase to make it easier for the fund’s investors to manage and trade Bitcoin.
It’s a sure sign that sophisticated investors are getting more comfortable with the crypto market.
Well, BlackRock wasn’t finished.
This week, the firm announced it is creating a spot Bitcoin private trust for U.S.-based institutional investors.
The trust, BlackRock’s first to offer direct exposure to Bitcoin, will track the performance of crypto’s poster child… and potentially other cryptos as well.
BlackRock’s vote of confidence is another huge step toward the widespread adoption of crypto. That will bring more stability to the market… and more acceptance that crypto is a serious and viable asset class.
As one crypto analyst put it, “The BlackRock news is probably the most bullish news for a long-term Bitcoin holder ever.”
Here’s the Proof
Not one to let Bitcoin have all the glory, Ethereum also had a big week that sent its price higher.
The second-largest crypto by market cap had some exciting news to share about its long-awaited upgrade, or “fork”…
Simply put, Ethereum will move from a “proof of work” system to a “proof of stake” model for verifying blockchain transactions and minting coins.
All we need to know is this… Proof of stake is far more environmentally friendly (solving a major problem with crypto). It will make transactions faster (making broader adoption possible). And it will reduce Ethereum’s supply (scarcity is what makes Bitcoin valuable).
As we’ve said, this move has been promised for a while (and is very complicated). But this week Ethereum completed a successful test run of the upgrade. That means the full upgrade is on track for a September launch, and crypto investors cheered the news.
Ethereum will play a big role in the future of digital assets. But its potential for upending the financial sector – especially when it comes to DeFi (decentralized finance) – is huge. And this upcoming “fork” will make it possible.
Investors know this… and have sent Ethereum’s price soaring. It’s gone up nearly 80% over the past month. And it has plenty more room to run.
Bitcoin and Ethereum are the biggest and most established players in the crypto sector. They’ll open the door to the next crypto bull market… and savvy investors will be paying attention.
Amanda Heckman|Editorial Director
Amanda Heckman is the editorial director of Manward Press. With unrivaled meticulousness, she has spent the past dozen or so years – give or take a few sabbaticals – sharpening Andy’s already razorlike wit. A classically trained musician and a skilled writer in her own right, Amanda takes an artistic approach to the complex world of investing. Her skill has led her to work with numerous bestselling authors, award-winning financial gurus and – lucky for us – the fine folks at Manward Press.