What happened
The strong momentum we saw proliferate in the crypto market Tuesday has boiled over into today's trading session. Top-10 cryptocurrencies Bitcoin (BTC -3.73%), Ethereum (ETH -3.70%), and Dogecoin (DOGE -7.48%) rocketed 5.6%, 10.7%, and 8.7% higher over the past 24 hours, as of 10:15 a.m. ET.
The macro environment for crypto looks to be stabilizing, with the benchmark 10-year U.S. Treasury yield stabilizing (and actually inching lower) today ahead of a key Federal Open Market Committee (FOMC) meeting today. Tech stocks and crypto tokens are each rising ahead of this meeting, with the market betting that the recent hawkish tone of the Fed won't get too hawkish just yet.
Image source: Getty Images.
Forced liquidations have come down considerably from the crypto market turmoil we saw toward the end of last week. For top cryptocurrencies like Bitcoin and Ethereum, this has been a big positive.
Investors in meme token Dogecoin appear to be extending yesterday's gains, following a tweet from Elon Musk that the self-proclaimed Dogefather would "eat a happy meal on tv" if McDonald's agreed to accept Dogecoin.
So what
Overall, it appears macro sentiment in the crypto world is finally turning around. Certainly, today's FOMC meeting and changes in bond yields could impact the demand for high-risk assets, driving more volatility through the back half of this week. We've seen correlations between cryptocurrencies and interest rates pick up of late, an interesting phenomenon to watch.
As the world's largest cryptocurrencies, Bitcoin and Ethereum tend to capture much of the capital that flows from large institutional investors. This recent market volatility appears to have struck a chord with big-time investors, with Bitcoin and Ethereum seeing the bulk of capital outflows in recent weeks.
Dogecoin's momentum may be near-term in nature, however, investors appear to be betting that given the macro catalysts for this sector, this meme token could go on another run.
Now what
Taking a broad look at the crypto world this week, sentiment is vastly improved over what we've seen this year. The overall crypto market has risen approximately 7% at the time of writing, suggesting there are still some investors out there interested in buying this dip.
With much of the speculative fervor seemingly dying out, perhaps this is a consolidation phase that will lend itself well to long-term investors coming in and buying up tokens, stabilizing the supply of these key cryptocurrencies. Or maybe this is but a fleeting moment in a longer "crypto winter."
In either case, the crypto world is one that never ceases to provide an interesting narrative. This will be a fun space to watch moving forward.
