Why Bitcoin, Ethereum, and Dogecoin Are Spiking This Morning

What happened

Top cryptocurrencies Bitcoin ( BTC 11.16% ), Ethereum ( ETH 8.66% ), and Dogecoin ( DOGE 5.61% ) each rocketed higher in late-morning trading, making up all of this morning’s losses, and then some. As of 11:30 a.m. ET, these three tokens have surged 5.3%, 1.7%, and 1.5% higher. This surge negates earlier intraday declines of 4.8%, 6.7%, and 3.8%, respectively.

This impressive crypto turnaround followed the movements seen in most stock indexes, as earlier concerns around Russian veiled nuclear threats toward the West have tapered off. As of 11:30 a.m. ET, the Nasdaq had moved green, with investors seemingly taking a buy-the-dip approach to risk assets. Cryptocurrencies have traded in high correlation to Nasdaq-listed stocks of late. 

Additionally, recent news that Ukraine has tapped crypto Twitter, requesting Bitcoin and Ethereum to fund its war efforts, has emboldened the crypto crowd.

So what

Ethereum, Bitcoin, and Dogecoin are three of the most liquid and most traded assets in the crypto world. As such, investors often look to these tokens to gauge investor interest in the sector. Today, sentiment is surging into positive territory once again, as investors take a risk-on approach to riskier assets. Indeed, it appears investors in both equities and crypto markets may be taking the view that the geopolitical risks that caused recent sell-offs in these asset classes has fully priced in this risk, with rallies on any sort of positive news suggesting this could be the case.

The higher correlation we’ve seen between cryptocurrencies and risk equities of late appears to have turned some investors on to the idea of trading cryptocurrencies as a higher volatility proxy for certain companies, such as high-growth tech stocks. Until this correlation is broken, it appears the outsize volatility we’re seeing in the crypto world will be seen as a trader’s best friend. 

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That said, there’s also an interesting idea that top cryptocurrencies like Bitcoin and Ethereum could still be viewed as an “off-the-books” financing mechanism for countries looking to bypass sanctions or hide their financing sources during wartime. Accordingly, there’s an intriguing angle some investors are taking with cryptocurrencies, in that these tokens could hold some potential value as safe-haven assets, should governments be forced to shift their focus to digital assets.

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Now what

It’s certainly an exciting time to be a crypto investor. For those who don’t like volatility, one may be able to substitute the word exciting for terrifying. However, this is where we’re at.

Until the markets calm down, I expect to see continued intraday moves like the one we’ve seen today. Right now, uncertainty is causing tremendous volatility in all markets, with cryptocurrencies following suit.