Why Bitcoin, Ethereum, and Silvergate Capital Popped on Tuesday

What happened

The market is in a good mood again on Tuesday, and that’s helping cryptocurrency values push higher. Bitcoin (BTC 0.23%) was up as much as 3.5% in the past 24 hours, as of 2 p.m. ET, but is still off 4.7% in the past week. Its smaller rival Ethereum (ETH 0.98%) is up 3.2% today but is off 13.1% in the past week.

Silvergate Capital (SI 13.48%), which is a digital finance company, has also seen its value rise as much as 13.2% in trading today, although it’s up 10.9% as I’m writing. Why is the digital currency market popping today?

Image source: Getty Images.

So what

Last week was one of the worst we’ve seen in the crypto industry, with TerraUSD losing its peg to $1 and eventually collapsing both the stablecoin and Terra (LUNA). This led to a flurry of selling and multiple stablecoins losing their pegs momentarily.

Some stability returned to the market over the weekend, and that’s brought some confidence back for investors. The values of cryptocurriencies like Bitcoin and Ethereum are on the rise again, and altcoins are climbing as well.

As quickly as the crypto market dropped last week, we need to keep in mind that it’s much more mature than it was just a few years ago. Thousands of developers have moved into the industry, building on cryptocurrencies like Bitcoin and Ethereum, and these businesses are much more ingrained than in the crypto winter of 2017. Long term, I think the future looks brighter than it did a few years ago.

Now what

Volatility continues to be the norm in cryptocurrencies, and today is another reminder of that. But I think it’s important to keep in mind what’s being made here with payment systems and digital projects now being built on top of the blockchain. As that continues, it should help Bitcoin and Ethereum long term.

I continue to be bullish on the crypto market, but there will be volatility in the meantime. A lot of money has been made and lost simply by trading cryptocurrencies over the past year, and we’re entering a new phase where utility, not trading, will likely generate the most value. That could lead to some investors abandoning the market as others move in, which isn’t bad as the industry matures.

A down market like this can be a buying opportunity for investors willing to hold for the long term as well. Great companies and projects are built in a down market, so the cryptocurrencies and projects built on top of the blockchain that can thrive now will be the projects we talk about a decade from now, as long as investors are willing to buy and hold quality digital assets.