Why Bitcoin, Ethereum and Sandbox are Up Today

by James · February 16, 2023

Table of Contents

What happened

It’s another glorious day to be a cryptocurrency investor. As of 2:15 PM ET Thursday, the entire cryptocurrency market had gained 6.3% over the past 24 hours, keeping its overall market cap well above the psychologically important $1 trillion threshold.

Among the key drivers of this rise in value were the usual suspects. Bitcoin (BTC 1.40%) gained 7.7% during this time frame, hovering around the $25,000 level and hitting an eight-month high. Ethereum’s (ETH 0.91%) The 24-hour move of 7% came as investors shrugged off concerns about the potential for more intense regulatory oversight of proof-of-stake blockchains. And The sandbox (SANDY 0.69%) made an even more impressive 24-hour move, rising 8.7% as this week’s token unlock appeared to have had a negligible effect on its value in the short term.

So what

The key factor driving interest in all digital tokens on Thursday appears to be increased interest in assets that provide maximum exposure to the continued increase in risk we are seeing in financial markets. In fact, the sector-specific headwinds that have arisen for crypto should, in theory, have driven reduced demand for these tokens. That said, it appears that investor demand for cryptocurrencies remains high, as concerns about greater regulation and higher interest rates are offset by euphoric enthusiasm in the markets.

The extent to which these sector-specific headwinds will have a meaningful impact on prices remains to be seen. That said, right now regulatory risks appear to be higher than ever following the high-profile $300 million settlement between the Securities and Exchange Commission and crypto exchange Kraken, with the exchange shutting down its betting services altogether. For Ethereum and ERC-20 tokens like The Sandbox, this could be a big deal.

What now

There is clearly an impressive bullish sentiment building among crypto investors and speculators betting on what could be a short squeeze among these high-risk assets. Despite being down from a leverage ratio of around 0.4 in October 2022, Bitcoin’s total leverage ratio of around 0.26 remains much higher than the average over the previous bull market rally. Thus, Bitcoin and other top tokens appear to be more susceptible to higher volatility moves on all sorts of catalysts.

The impressive nature of this year’s risk rally has surprised many, including myself. We’ll see how long it lasts. But for now, it looks like there is a party again in the crypto sector.