It's been a pretty ordinary few weeks for cryptocurrencies and cybersecurity.

In Australia, millions of consumers have had to deal with the theft of their private information from Medibank Private Ltd (ASX: MPL) and Optus.

Globally, the finance industry has been left bemused — and distressed — at the collapse of giant crypto exchange FTX.

While these issues are front-of-mind, the Australian Securities and Investments Commission this month warned Australians to be vigilant about crypto scams.

According to ASIC deputy chair Sarah Court, Australians lost in excess of $710 million from investment fraud in 2021, which was a shocking 135% higher than the previous year.

"The main driver of the increase was cryptocurrency investment scams, where losses increased by 270%," she said.

"The ACCC have advised that losses to crypto scams have increased further in 2022."

If you're in one of these 10 situations, watch out

The corporate watchdog stated crypto scams fall into one of three broad types:

• Scams where the investor thinks they're putting money into a genuine asset, but the app, exchange or website is fake
• Scams selling fake crypto tokens to steal your legitimate cryptocurrency (like Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH)) in return and crypto trading jobs that are just facilitating money laundering
• Scams that use digital assets to make a payment

So how can you tell if something is a scam? 

ASIC has published 10 signs that likely mean you're dealing with a criminal trying to steal money or data. 

Be very suspicious if one or more of these things happen to you:

1. You receive a golden offer or opportunity just out of the blue
2. You see a faked celebrity endorsement
3. A romantic interest you only know online starts asking for crypto
4. You're pressured to transfer crypto from your current wallet or exchange to another site
5. You're directed to pay for a financial service using crypto
6. The app you're about to install isn't available on Google Play or the Apple Store
7. You have to pay a fee to access your own money
8. You are guaranteed a certain level of returns or offered free money
9. Unfamiliar digital tokens land in your digital wallet
10. The exchange withholds investment returns for supposed "tax purposes"

Court implored those who suspect they've fallen for a scam to "act quickly".

"Don't send any more money. Block all contact from the scammer," she said.

"Do not delay. Contact your bank or financial institution immediately to report the scam. Ask them to stop any transactions. Also, warn your family and friends so they can watch out for potential follow-up scams."

The deputy chair reminded investors that financial loss is not the only cost when falling victim to such fraud.

"Scams cause emotional stress and can impact relationships."

More information on crypto scams can be found on ASIC's Moneysmart website. Crisis support is available through Lifeline on 13 11 14 and emotional support via Beyond Blue on 1300 22 46 36.

The post Top 10 signs you've been crypto-scammed appeared first on The Motley Fool Australia.

Cryptocurrency prices like those of Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH) have been incredibly volatile this week, although that is nothing too new.

Unfortunately for crypto investors, volatile in this case means they have fallen in value, and substantially so. At the start of this week, you could exchange one Bitcoin for just under US$21,000. Today, that same coin is going for around US$17,000. That's a drop close to 20%. Ouch.

It's been even worse for the second-largest cryptocurrency by market capitalisation, Ethereum. Ethereum has fallen from around US$1,550 at the start of the week to the US$1,232 it is commanding today, a fall of more than 21%.

These falls can probably be attributed to the disaster of the global cryptocurrency exchange FTX. As my Fool colleague Bernd dug into this week, FTX is, or at least was, one of the largest exchanges in the world. But after a liquidity crisis, FTX is now in deep trouble and could be facing collapse.

All of this roiled crypto markets and sent Bitcoin to its lowest price in two years. But could this affect the share market?

Has Bitcoin's woes affected ASX shares this week?

After all, many cryptocurrency investors also invest in shares, and vice versa. So investors might be wondering how this massive volatility in the crypto markets could affect their ASX shareholdings.

We're used to hearing arguments in favour of investing in cryptocurrencies that involve the supposed lack of correlation these markets have with other assets like shares. After all, many investors still call Bitcoin 'digital gold'.

Well, what happens in cryptocurrency markets can certainly affect shares that are involved in the crypto markets. Fellow crypto exchange Coinbase Global Inc (NASDAQ: COIN) shares have lost more than 15% over the past five trading days. And the ASX-listed BetaShares Crypto Innovators ETF (ASX: CRYP) has lost more than 20%.

But apart from these crypto-linked companies, the markets overall seem unfazed. Over those same five days, the NASDAQ-100 (NASDAQ: NDX) has risen by a very healthy 6.4% or so. The S&P/ASX 200 Index (ASX: XJO) is up 3.85%, while the American benchmark S&P 500 Index (SP: .INX) has gained over 5%. Even gold is up big.

So it seems that, at least this time, volatility in the cryptocurrency markets has not even touched our share portfolios.

The post How might volatile crypto prices impact your ASX shares? appeared first on The Motley Fool Australia.

It's hard to imagine that just a year ago, many notable cryptocurrencies like Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH) hit new all-time highs.

In November 2021, the most valuable cryptocurrency, Bitcoin, peaked at around $67,000. Meanwhile, the second-most valuable cryptocurrency, Ethereum, notched an all-time high just shy of $4,900.

That month, the market cap of the cryptocurrency asset class reached a collective value of over $2.8 trillion, a new record. But since then, Bitcoin and Ethereum are both down nearly 65% from their highs and the total crypto market cap sits at just over $1 trillion, a fraction of what it once was.

After this kind of obliteration, concerns are likely warranted. If you're a new crypto investor, this is likely your first time witnessing a price decline of this magnitude. Welcome to crypto.

The overall trajectory of cryptocurrencies has climbed over the past decade. Still, it seemed all hope might just be lost in some brutal stretches. Let's take a look at some of those rough patches to put the current one into a little better context. 

Seasons come and go

One of the first crypto bear markets occurred throughout most of 2014 and 2015. After the asset class hit a new market cap all-time high of more than $15.5 billion in December 2013, a slow descent ensued over the next two years and bottomed around $3.7 billion in May 2015, a 75% decrease.

During that same period, Bitcoin lost 80% of its value and went from around $1,100 to just a few hundred dollars.

Yet prices returned to new highs by January 2018. The total crypto market cap reached more than $827 billion and Bitcoin hit a price of almost $20,000, jumps of 22,000% and 9,400%, respectively. 

Those highs were short-lived, like many market tops, and a crypto winter gripped the market for all of 2018. After finding a bottom around January 2019, the crypto market cap had shed 80% of its value and fallen to just over $100 billion. In a similar fashion, Bitcoin lost more than three-quarters of its value. 

But by November 2021, those woes of 2018 were all but forgotten. In a matter of about two and a half years, the crypto asset class hit a new all-time high of around $2.8 trillion and Bitcoin reached more than $67,000. 

Crypto investors now find themselves in a similar situation to years past. Since that peak, the crypto market cap has lost more than half of its value, and Bitcoin is down nearly two-thirds from where it once was. 

The point is, crypto has been here and done that. Not just once, but three times. And each past decimation has been followed by a considerable rally. 

Lessons to be learned

Investors shouldn't act with certainty and think that just because it happened once, it will happen again, but they can use data to make informed decisions.

And the data shows that historically, investors have the most to gain when crypto and Bitcoin lose around two-thirds of their value.

In addition, the data shows that the return to new highs is not an overnight process. Nor will it happen in a year. It usually takes about two to three years before new highs are made. This isn't to give you a sense of false hope but rather serve as advice to keep a long-time horizon. 

Hindsight is always 20/20, but imagine if you invested at the absolute bottom of each one of these past bear markets.

A $1,000 investment in Bitcoin when it was worth just a few hundred dollars in 2015 would have been worth more than $90,000 by 2018. A similar $1,000 investment at the 2019 market bottom, when Bitcoin was worth just over $3,200, would have grown to around $20,000 by November 2021. 

Investors today need to keep a few things in mind when navigating these tumultuous times. First, maintain a broad time horizon. The true winners of this bear market will be the ones who plan on holding for at least three years and ideally even longer. 

Second, prioritizing cryptocurrencies with a solid track record is a proven strategy to minimize risk and maximize potential.

It isn't unheard of for a cryptocurrency to be here today and not make it to tomorrow. Investing in "blue chip" cryptocurrencies like Bitcoin and Ethereum is most recommended since they account for more than half of the value in the entire crypto market. 

Finally, consistency is key. Ensuring that you continue to gain exposure by investing regardless of the price is the best way to maximize your potential profits should prices return to new highs. Ignore the day-to-day and week-to-week price fluctuations.

Remember, bull markets make you money, but taking advantage of bear markets can make you rich. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post If cryptocurrency prices continue to plummet, what should you do? appeared first on The Motley Fool Australia.

What happened

Most cryptocurrencies and crypto stocks continued to plunge today as the industry deals with the fallout from the events in recent days that ultimately led the large crypto exchange FTX to agree to sell its non-U.S. operations to Binance.

Over the past 24 hours, shares of the world's second-largest cryptocurrency, Ethereum (CRYPTO: ETH), traded more than 24% lower as of noon today. Shares of the meme tokens Shiba Inu (CRYPTO: SHIB) and Dogecoin (CRYPTO: DOGE) traded more than 16% and 23% down, respectively.

So what

In recent days, there have been rumors questioning the solvency of FTX after a scathing report from the news website CoinDesk said that the crypto exchange's sister trading firm, Alameda Research, had a large number of its total assets in the cryptocurrency FTX Token (CRYPTO: FTT).

FTT is the in-house cryptocurrency created by FTX. The concern was what would happen to both Alameda and therefore FTX, because of how tied the two companies were, if the price of FTT fell. Furthermore, there were concerns about whether FTT was being used as collateral in any way. Not that it matters as much now, but the price of FTT is down more than 78% over the last 24 hours.

On the news of Alameda, Binance's CEO Changpeng Zhao announced that he would liquidate $2 billion of his FTT holdings, which started the concerns about FTT's price holding up and the impact on FTX and Alameda.

While FTX CEO Sam Bankman-Fried tried to calm these fears, taking to Twitter to say that FTX's balance sheet was sound, customers began to withdraw their funds from FTX; the crypto exchange said it saw $6 billion of withdrawals in 72 hours. This eventually led Bankman-Fried to turn to Zhao and sell FTX's non-U.S. operations to shore up the liquidity crunch the company was facing.

But the deal is pending due diligence, and there are already media reports, including one from CoinDesk citing anonymous sources, suggesting Binance might not end up going through with the deal. This whole series of events has shaken the faith in the entire crypto industry, similar to other big crypto meltdowns like that of algorithmic stablecoins.

"It shows that no one is too big to fail," Pascal Gauthier, CEO of crypto wallet firm Ledger, said on CNBC. "FTX seemed untouchable."

This also could hurt the resolve of the general public and reduce investing activity if people are skeptical about the large crypto exchanges and believe that they lack stability.

Now what

I don't know if the events over the last few days have affected my view of specific cryptocurrencies, but more so reflect the erratic nature of the industry as a whole and how it is still very much the Wild West.

FTX played an important role in the industry, so to see it go down so quickly -- and to realize some of the issues it likely had -- are going to raise a lot of questions.

Ultimately, my view hasn't changed on these three cryptocurrencies. I still like Ethereum at these levels and think the token has great long-term potential because of all of its real-world uses. The recent upgrades to the network should also greatly help Ethereum scale as well.

I am still not a fan of Dogecoin or Shiba Inu due to their lack of real-world utility and the lack of technical capabilities on each of their perspective networks.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why Ethereum crashed today appeared first on The Motley Fool Australia.

What happened 

Cryptocurrencies didn't just wake up on the wrong side of the bed this morning; they had a terrible night. At 9:45 p.m. ET on Monday, the bottom fell out of the FTX Token (CRYPTO: FTT) and the race was on to sell everything in crypto. 

The worst of the decline was reserved for smaller cryptocurrencies, but as of 9:40 a.m. ET, Bitcoin (CRYPTO: BTC) has fallen 5.8% in the last 24 hours, Ethereum (CRYPTO: ETH) is down 7.5%, and Aptos (CRYPTO: APT) has dropped 13.3%. 

So what 

Drama has been building in the crypto space for about a week after CoinDesk reported that Sam Bankman-Fried's trading arm, Alameda Research, has $14.6 billion in assets and $8 billion in liabilities. That's not a problem in itself, but CoinDesk also said that $5.8 billion of the assets were the FTX Token, FTT. It's notable that Bankman-Fried also founded the FTX exchange, which is one of the top exchanges in cryptocurrencies.

Over the weekend, Binance CEO Changpeng Zhao announced that he would be selling nearly $500 million in FTX Tokens, causing speculation that their value would plummet. That's exactly what happened on Monday night, whether it was because of Binance's selling or traders anticipating the sale.

At the same time, customers are pulling money off of FTX's exchange, which could cause a "run on the bank". Nansen reported that FTX has had $1.2 billion worth of Ethereum and ERC-20 tokens withdrawn in the last 24 hours compared to $540 million in deposits. CryptoQuant says FTX's Bitcoin reserves were zero at one point.

Banks and exchanges typically don't keep enough reserves to pay all customers their money if they withdraw all at once, which is known as a run on the bank. This can cause panic selling and leave a company insolvent relatively quickly. 

Now what 

This is reminiscent of the summer collapse of Three Arrows Capital, which brought down Celsius Network and Voyager with it. Leverage that investors didn't know about on the balance sheet suddenly became problematic when crypto values fell and loans were called back. 

We're not sure this is what's happening at Alameda with the FTX Token, but given the price action and money moving out of FTX, investors are taking a cautious approach. 

It's not clear what happens next. FTX is still one of the largest exchanges, and if it fails, the impacts on crypto could be enormous. I wouldn't be surprised if this isn't the end of the decline in crypto prices, although that means a buying opportunity for long-term investors, because an exchange can go bankrupt, but a token can't.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why Bitcoin and Ethereum were down big on Tuesday morning appeared first on The Motley Fool Australia.

Ethereum (CRYPTO: ETH), the world's number two crypto, has slipped 3% to US$1,542.

With equities under pressure following the latest interest rate hike from the Federal Reserve, both tokens are holding up fairly well today.

But the same can't be said for their performance over the last year.

On 10 November last year, the Bitcoin price reached all-time highs of US$68,790. It's down a painful 71% since that record.

The Ethereum price notched its own record highs six days later. On 16 November Ether was trading for US$4,892. It's fallen 69% from that virtual high water mark.

Facing these kinds of headwinds, two of Australia's pioneering crypto exchange-traded funds (ETFs) are pulling the plug.

Ethereum and Bitcoin price falls hampered these ETFs

Cosmos Asset Management launched the Cosmos Purpose Bitcoin Access ETF (CBTC) and Cosmos Purpose Ethereum Access ETF (CPET) earlier this year.

The Bitcoin ETF made its debut on the Cboe Australia exchange (formerly Chi-X) on 12 May, as The Motley Fool covered here. At that time, the Bitcoin price had already taken a big tumble but was still trading for around US$30,000.

While crypto investors had hoped that may be the bottom for the Ethereum and Bitcoin price rout, we know now that's not how it panned out.

With the funds under pressure, yesterday Cosmos informed investors that it "will be applying to revoke the funds' quotation on Cboe".

Trading in both the Cosmos Bitcoin ETF and Ethereum ETF was halted on Monday. Cosmos stated, "Trading on the funds will continue to be halted pending the outcome of the application to Cboe."

Commenting on the decision, Dan Annan, CEO of Cosmos, said (courtesy of The Australian Financial Review):

While we strongly believe in the asset class, we are all disappointed with this result. The ETFs are ring-fenced by independent external service providers, which is a key transparent risk mitigation structure across all asset classes… We will continue to follow the process in the best interests of all unitholders.

Both crypto ETFs look to be a casualty of fast-rising global interest rates.

The Bitcoin price reached its records when rates across the developed world were at historic lows, with central bankers predicting several more years of low rates.

The post Ethereum and Bitcoin price crash spells the end for these Aussie crypto ETFs appeared first on The Motley Fool Australia.

The Ethereum (CRYPTO: ETH) price is up 18% over the past month, and it currently rests at the $2,453 level.

The cryptocurrency is struggling year to date, being down around 50%. It has made a recovery since touching an apparent bottom in June, but it has gone through some wild swings since then.

Meanwhile, Bitcoin (CRYPTO: BTC) is also up over the past month, having gained more than 5%. The coin currently trades for $32,002 apiece.

As a risky and speculative asset, cryptos like Ethereum are generally one of the first markets that short-term investors withdraw their funds from and into safer investments such as dividend stocks.

With the crypto market recovering, this could be a sign that investors have started to take a little nibble again at riskier assets. The question is whether this momentum will last moving forward.

Let's take a look at both sides of the argument for investing in Ethereum at its current price point.

What the bulls say

There's good reason to believe that crypto investors are feeling confident about the Federal Reserve's intention to lessen the pace of interest rate hikes, as reported by CoinTelegraph. This may help ease pressure on risky assets such as cryptocurrencies as well as give share investors some breathing room.

The market could also be rallying in anticipation of the release of a number of earnings reports from crypto and web3 companies this week, as reported by The Block. Some companies that are due to announce earnings include Coinbase (NASDAQ: COIN), Robinhood (NASDAQ: HOOD), and Coinshares (STO: CS).

And then on Twitter, Real Vision CEO Raoul Pal posted a bullish tweet stating that he believes Ethereum will continue its bull run.

Pal said:

Is the ETH/BTC ratio the single most bullish major asset price chart in the world? Might well be…

What the bears say

On the opposite side of the argument, there is some evidence that could be interpreted as investors being cautious and taking profits while they can, which could pump the brakes of a continuing rally.

This insight was reported by Be In Crypto on Monday, with active Ethereum addresses making lower lows on the daily charts.

It was suggested the rally could also be artificial and the result of significant Ethereum holders, known as whales, depositing large amounts of the crypto on exchanges, causing prices to rise.

Additionally, it said Ethereum could have reached a temporary price ceiling, with sellers able to take further profits during the peak euphoria of the crypto's rally before coming back down to earth again.

The post Up 18% in a month, could it still be worth buying Ethereum at its current price? appeared first on The Motley Fool Australia.

What happened

Cryptocurrencies continued their ascent this morning, as bond yields dropped and investors got more optimistic about the trajectory of interest rates. There has also been an apparent short squeeze this week for several prominent cryptocurrencies.

Over the last 24 hours, the prices of Bitcoin (CRYPTO: BTC), Ethereum (CRYPTO: ETH), and Dogecoin (CRYPTO: DOGE) had all made significant gains.

The price of Bitcoin traded roughly 6.6% higher and hovered around $20,777 as of 10:26 a.m. ET today. The price of Ethereum traded roughly 13.4% higher, and the price of Dogecoin was up 10.4%.

So what

Cryptocurrencies have been crushed all year long because of the Federal Reserve's aggressive interest rate hikes, which have led to surging bond yields as well.

But this week, bond yields have receded some, with the yield on the 10-year U.S. Treasury bill coming down from above 4.2 percentage points earlier this week to just above 4 percentage points as of this writing.

That has buoyed stocks and cryptocurrencies, as investors get hopeful that perhaps the bulk of the Fed's rate hikes will soon be at an end. 

But in other news, there have been reports of a big short squeeze that has driven the recent gains of Bitcoin and Ethereum. CoinDesk reported that major exchanges have seen some of the largest liquidations of short positions since the middle of 2021.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why are Bitcoin, Ethereum, and Dogecoin leaping higher today? appeared first on The Motley Fool Australia.

This week saw the launch of Aptos, which had long been hyped as the ultimate Ethereum (CRYPTO: ETH) challenger. But everything that could go wrong did go wrong for Aptos. The token fell nearly 50% in its first 24 hours of trading. The team promised 100,000 transactions per second, but missed that in stunning fashion. Aptos immediately became the top trending coin on CoinMarketCap, but for all the wrong reasons. 

If you're an Ethereum investor, of course, this is all remarkably good news. There has been a long line of so-called "Ethereum-killers," and Ethereum has repelled each one of them. Aptos was the one that everyone thought had a decent chance of actually replacing Ethereum as the top Layer 1 blockchain network. It might still be too early to dismiss Aptos, but it looks like Ethereum now stands as the undisputed Layer 1 blockchain leader.

What went wrong with Aptos?

There were many reasons people had such strong hopes for Aptos. For one, Aptos has a blue-chip developer team. Many of the Aptos developers came from the Facebook unit at Meta (NASDAQ: META), and had experience with Facebook's much-hyped cryptocurrency project known as Diem. Remember 2019, when Mark Zuckerberg was promoting a crypto token called Libra that some experts said could eventually replace the U.S. dollar? Members of the Aptos team were part of that. As a result, some people referred to the Aptos team as the "Silicon Valley wunderkinds."

By all initial indications, Aptos seemed to have superior technology to Ethereum. Right out of the box, Aptos promised 100,000 transactions per second. That's blindingly fast, and certainly faster than current Ethereum speeds (25 transactions per second). But when the crypto token started trading, it was only hitting four transactions per second. Yikes!

And, finally, Aptos completely bungled the tokenomics of its launch. This is what most likely led to the crypto token falling sharply in its first 24 hours of trading. Tokenomics refers to factors such as the initial supply of the token, as well as how the token can be created ("minted") or removed from circulation ("burned") in the future. It also refers to how the token is initially distributed.

At the time of launch, it looked like an overwhelming majority of the tokens were being distributed to Aptos insiders, and that concerned people. Moreover, Aptos did not release the exact details of its tokenomics until just 24 hours before it began trading, which some saw as a potential red flag.

Ethereum is still the undisputed market leader

If you take a 30,000-foot view of the Layer 1 blockchain market, it now appears that Ethereum clearly stands alone at the top. Older Layer 1 blockchain rivals, such as Cardano (CRYPTO: ADA), still have not caught up to Ethereum in terms of functionality and overall market power.

Newer Layer 1 blockchain rivals, such as Solana (CRYPTO: SOL), Avalanche (CRYPTO: AVAX), and Fantom (CRYPTO: FTM), are all down more than 80% for the year, and are facing serious questions about their long-term viability. Meanwhile, even some of the lesser-known Layer 1 challengers such as Algorand (CRYPTO: ALGO) and NEAR Protocol (CRYPTO: NEAR) are so new that the jury is still out on them.

Thus, if you believe in crypto's long-term viability, Ethereum seems to be the obvious long-term play. This is what the crypto market seems to be signaling. Yes, Ethereum is down 65% for the year, but that's still far less than Cardano (75%), Solana (85%), Avalanche (87%), or Fantom (92%). All cryptos have been punished this year, but Ethereum seems to be doing better than others on a relative basis. 

Ethereum is a long-term buy

If you are an optimist, there are no more Layer 1 challengers left for Ethereum. It won. And it's hard to see any more Layer 1 challengers emerging for Ethereum over the next 12 months. Maybe there is a blind spot on my investment radar, but it looks like Aptos was the last viable challenger. Investors who got burned backing Aptos are going to think twice before sinking their money into a similar type of blockchain project.

If you are looking for a solid "buy now and hold forever" crypto, it's Ethereum. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post The Spectacular fail of Aptos shows why Ethereum is the ultimate long-term buy appeared first on The Motley Fool Australia.

What happened

Today's moves in equity and cryptocurrency markets are providing a nice bout of bullish sentiment for investors who have been beaten down for most of 2022. As of 3 p.m. ET on Tuesday, Ethereum (CRYPTO: ETH), Bitcoin (CRYPTO: BTC), and Cardano (CRYPTO: ADA) had surged 11.7%, 4.9%, and 13.3%, respectively, over the past 24 hours. These moves come amid expectations that the Federal Reserve could tone down its pace of interest rate hikes sooner than expected, as well as some stronger-than-expected earnings reports from large-cap companies this week.   

One of the key drivers of expectations that the Fed could slow down its rate increases came out of new data released today with updated August numbers in the S&P CoreLogic Case-Shiller Home Price Index. While home prices accelerated 13% in August year over year, this increase was down considerably from the 15.6% rate seen in July. Accordingly, this was the steepest deceleration we've seen in the Case-Shiller index since its inception.

And data from the Case-Shiller 20-City index provided an even clearer picture of where prices are headed in major metropolitan areas. This metric showed a 1.6% decline in the top 20 major U.S. markets on a month-over-month basis.

Other positive earnings data from global companies such as Coca-Cola and GM this week stoked hopes that the economy could achieve a potential soft landing, allowing for lower interest rates in the intermediate term.

So what

Today's incredible moves higher in major cryptocurrencies signal the kind of high-correlation, higher-beta moves the crypto sector has been making this year. In general, most of the same macro factors driving stocks mostly lower this year have had a similar outsize effect on digital assets. Accordingly, as a higher-risk proxy for stocks, digital currencies often see larger gains during up days in the stock market.

Should interest rates begin to decline later this year, some analysts believe that we could see an accelerated rally into 2023. That said, it remains unclear if the Cosumer Price Index and Producer Price Index will corroborate with the lagging data we're seeing out of the housing market. 

Now what

Long-term investors looking to call a bottom have been unsuccessful in doing so thus far this year. Most bounces have been met with lower lows, suggesting true capitulation in high-risk assets has not been seen today. In some respects, today's surge in major cryptos could be a signal that speculative capital hasn't been fully washed out yet. Thus, perhaps today's rally is a bearish near-term signal for the market.

But it's entirely possible the market is right in its assessment that rates can't rise much further. The economy has undoubtedly slowed in certain core areas, such as housing. And given the lag in data that's been problematic in leading the Fed to be late to react to the initial surge in inflation, it's possible prices have come down more than the data suggest.

My take is that it's probably too early to say the selling pressure is over for crypto in general. However, these three high-quality tokens could be among the best performers when the market does turn bullish once again. Thus, now could be an interesting time to consider easing into positions as the market searches for a bottom. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why Ethereum, Bitcoin, and Cardano are rocketing higher today appeared first on The Motley Fool Australia.

What happened

The incredibly unpredictable price action seen in the cryptocurrency sector is once again in full focus today. In aggregate, the crypto market has moved meaningfully in tandem today, with the overall market rising a little more than 1.5% over the past 24 hours, as of 1:45 p.m. ET. 

That said, megacap tokens Bitcoin (CRYPTO: BTC), Ethereum (CRYPTO: ETH), and Cronos (CRYPTO: CRO) remain in focus for most investors, given the size and importance of these key blockchain projects. As of 1:45 p.m. ET, these three tokens surged 1.8%, 2.8%, and 4.4%, respectively, over the past 24 hours.

Interestingly, Bitcoin's move (which was the smallest of the three) follows an 85-minute window on Monday in which no blocks were produced. A difficulty adjustment appears to be tied to this issue, which raised eyebrows in the crypto world.

Other top tokens like Ethereum and Cronos have their own individual catalysts and headwinds. This week, it was announced that XRP is beginning to test a side chain compatible with Ethereum smart contracts. And Cronos has been benefiting from recent gaming-related updates, which have investors intrigued in this blockchain project's growth potential.

That said, the potential for further interest rate hikes by the Federal Reserve continue to provide headwinds for all risk assets. This makes the price action in these top tokens even more difficult to understand. 

So what

There's some very wonky thinking that appears to be taking hold in the markets right now. Given last week's hotter-than-expected CPI and PPI prints, most investors initially took the view that this would lead to more rate hikes, which are bad for risk assets. Cryptos, equities, and bonds sold off immediately on the news.

However, the past few days have seen some bullish momentum return, as some appear to be taking the view that more rate hikes in the near term could lead to a recession in the medium term. Such a recession could result in lower interest rates sooner than expected.

This second-derivative sentiment appears to be at play once again today, with the majority of near-term catalysts appearing to represent net negatives for cryptos still.

Now what

The difficulty of forecasting monetary policy decisions remains extremely high, and with most experts failing to see the inflation we're now battling, one could argue that any sort of forward-looking forecast is likely to be incorrect. Such is the nature of forecasts.      

That said, the idea that we could be due for lower interest rates in the medium term, as the Federal Reserve breaks something, is one that's starting to gather steam. For risk assets such as cryptos, a return of cheap(er) capital to the system could be the catalyst to drive valuations another leg higher. We'll have to see what happens in the months and quarters to come, but suffice it to say, there's plenty for investors to digest right now.  

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Crypto surges: Is now the time to buy Bitcoin and Ethereum? appeared first on The Motley Fool Australia.

Tron (CRYPTO: TRX) has always been a polarizing crypto, primarily due to its associations with controversial cryptocurrency entrepreneur Justin Sun, who launched Tron back in 2017. But it's getting increasingly difficult to ignore the fact that Tron has gained users and posted new transaction activity at an impressive rate throughout 2022. Could Tron finally be ready to stake its claim as a worthy Ethereum (CRYPTO: ETH) rival?

The most recent news that has investors buzzing is the announcement that Tron is now the official blockchain of the Caribbean island nation of Dominica. As a result of this, Tron will be issuing the first-ever government-backed crypto fan token. And Tron will also officially become legal tender in Dominica. There are also suggestions in the crypto community that Tron might leverage this deal to make similar deals around the Caribbean and in Latin America. If so, that would be huge in terms of Tron gaining worldwide market acceptance. So is this controversial crypto finally a buy?

Tron by the numbers

Analyzing Tron is like peeling back the layers of an onion. If you only look at the surface numbers, everything seems fantastic. Tron now has an impressive 115 million users worldwide, and has processed more than 4 billion transactions since it was founded back in 2017. Total Value Locked (TVL), which is a measure of how much activity is taking place on the blockchain, is an impressive $5.5 billion. That ranks Tron No. 2 among all blockchains, trailing only Ethereum.

In terms of overall market capitalization, Tron now ranks No. 15 in the world. It is now bigger than Avalanche (CRYPTO: AVAX), for example, which was once considered to be one of Ethereum's major rivals. Add in the fact that the price of Tron has been surprisingly resilient in 2022, and it might appear that Tron has finally emerged as a worthy rival to Ethereum, which is down nearly 70% for the year.

Red flags?

But there are definitely some red flags about Tron. For example, there have been persistent concerns about the new Tron algorithmic stablecoin ever since it launched in May. At the time, the new stablecoin was being favorably compared to the algorithmic stablecoin for the Terra (CRYPTO: LUNA) ecosystem. A stablecoin is supposed to avoid crypto market volatility, usually via a peg to a currency like the U.S. dollar. But Terra proved to be anything but stable and it collapsed, wiping out investors. In June, the Tron algorithmic stablecoin briefly lost its peg to the U.S. dollar, causing alarm bells to go off in the heads of crypto investors everywhere. What if Tron was the new Terra? 

And then there are all the opaque, behind-the-scenes dealings involving Justin Sun, who continues to be a major influence on Tron. You don't have to dig very deep to find some very salacious (and potentially defamatory) allegations about Justin Sun that involve the FBI, IRS, and Securities and Exchange Commission. Even if you ignore these claims, there are very real concerns that Tron might be a "security" and not a "cryptocurrency." As a result, Tron is not available for trading on every major cryptocurrency exchange. 

Sun left Tron at the end of 2021 to become Grenada's ambassador to the World Trade Organization (WTO). This, apparently, is what has led to Tron's sudden prominence in the Caribbean region in 2022. Sun is continuing to give interviews about Tron and promote it on social media, even while fulfilling his diplomatic duties. 

Is Tron a buy?

That's why I'm discounting the value of the news surrounding Tron's expansion into the Caribbean and Latin America. I love the idea of creating "fan tokens" for tourism destinations, and it's exciting that sovereign states around the world are experimenting with cryptocurrencies as legal tender. But somehow, deep down, something just doesn't add up when it comes to Tron. Maybe it has to do with the fact that Tron seems to be facing an enormous amount of legal and regulatory uncertainty in both the U.S. and China, where it conducted its initial coin offering (ICO).

For now, I cannot recommend Tron as a buy. While the recent price of  $0.06 may seem enticing, I think that there are several other Layer 1 blockchain projects that are much better set up to become "Ethereum-killers" in the future. Investing in cryptocurrencies always involves risk and volatility, and investing in Tron -- even at a bargain-basement price -- seems to come with an extra measure of both. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Is this controversial Ethereum-killer finally a buy? appeared first on The Motley Fool Australia.

Alphabet Inc (NASDAQ: GOOG), or Google to you and me, looks to be joining the crypto party.

Google has been gradually increasing its footprint in the crypto space for some time now.

And this week, the tech giant announced a partnership with Coinbase Global Inc (NASDAQ: COIN) to improve the Web3 ecosystem.

Google Cloud to accept crypto payments

According to news provided by Google Cloud, that partnership will see certain customers be able to pay for their cloud services via select digital tokens.

Coinbase supports numerous cryptos, including Bitcoin (CRYPTO: BTC), Ethereum (CRYPTO: ETH), and Dogecoin (CRYPTO: DOGE).

Following the initial rollout in early 2023, Google will likely expand that offering to more customers.

Atop enabling payments in select tokens, CNBC reports that Google is also looking into the possibility of employing Coinbase Prime. Coinbase Prime stores companies' cryptos alongside enabling trades.

What did management say?

Commenting on the partnership that will see Google Cloud accept crypto payments, Coinbase CEO Brian Armstrong said: "We are excited Google Cloud has selected Coinbase to help bring Web3 to a new set of users and provide powerful solutions to developers."

Armstrong continued:

With more than 100 million verified users and 14,500 institutional clients, Coinbase has spent more than a decade building industry-leading products on top of blockchain technology. We could not ask for a better partner to help execute our vision of building a trusted bridge into the Web3 ecosystem.

Google Cloud CEO Thomas Kurian also touted the advantages for Web3 developers:

We want to make building in Web3 faster and easier, and this partnership with Coinbase helps developers get one step closer to that goal… Our focus is making it frictionless for all customers to take advantage of our scalability, reliability, security, and data services, so they can focus on innovation in the Web3 space.

It's unclear if Google intends to hold the Bitcoin, Ethereum or other cryptos it receives as payment for its cloud services or swap them for fiat currency.

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Staying current with trends is one of the most important facets of successful investing. Being quick to recognize those that will eventually turn into the status quo is one way to build a portfolio that beats the market.   

Imagine investing in some of the most high-profile tech stocks a decade ago. Today, companies like Meta Platforms (NASDAQ: META), Amazon (NASDAQ: AMZN), Apple (NASDAQ: AAPL), Microsoft (NASDAQ: MSFT), and many others are intertwined with our daily lives. An investor aware of trends a decade ago could have foreseen that and capitalized on those opportunities. In the last 10 years, the tech-heavy Nasdaq Stock Market increased nearly 250% in value.   

Now, hindsight is always 20/20, but there is one trend today that presents a similar opportunity to that of a decade ago.

The new age of the internet

Our reliance on the internet seemingly increases every year. Some companies capitalized on this and now have an omnipresent role in our daily lives. These companies provide technology, track your every move on the internet, and generate an absurd profit from their centralized business models. But it looks like that might be coming to an end thanks to new technology with the potential to upend the current status quo of the internet. 

Known as Web3, this new age of the internet aims to be everything that our current internet, referred to as Web2, isn't. In Web3, things such as social media, finance, gaming, and the metaverse have the potential to mark a break from today's centralization. With Web3, decentralized blockchains would be the backbone for an internet that's open source, offers secure interoperability between apps, and is entirely trustless -- meaning no third party, like Google, is needed for the system to function. 

A recent report by Vantage Market Research on the current standing of Web3 valued the sector at just under $3 billion. But the same report says it has the potential to grow to roughly $23 billion by 2028. That's an increase of more than 700%. So how can investors capitalize on this opportunity?

Well, because blockchains are the foundation of Web3, owning the cryptocurrencies native to those blockchains is one simple way to gain exposure to the new age of the internet. Based on current developments, I believe there are three that are rising to the task of supporting Web3's future growth: Ethereum (CRYPTO: ETH), Polygon (CRYPTO: MATIC), and Arweave (CRYPTO: AR).  

Ethereum

Ethereum is slowly becoming the foundation of Web3. To be straightforward, there is no possibility of Web3 without Ethereum. With its smart contracts, developers can program decentralized apps (dApps) to replace third-party entities, allow user data to flow seamlessly between applications without any collection, and (the best part) be highly secure and execute automatically when conditions are met. There are other smart-contract-based blockchains like Solana (CRYPTO: SOL) and Cardano (CRYPTO: ADA), but Ethereum has risen to the top as one of the most used blockchains. Its popularity has caused it to become the home of the most development for Web3 use cases. It could help to think of Ethereum as the base layer or code that allows Web3 to function, as JavaScript or HTML is for Web2. Any investor interested in Web3 should make sure they have a substantial amount of Ether in their portfolio.

Polygon

This network is positioning itself to become a powerhouse of Web3 as the new age of the internet continues to advance. Polygon is unique because it makes the shortcomings of Ethereum (namely slow transaction speeds and high fees) a thing of the past without sacrificing the security and decentralization that make Ethereum so desirable. To do this, Polygon offloads transactions from Ethereum's blockchain and then adds them back later. The technology that Polygon uses makes transactions lightning fast at a cost of less than a penny. 

Polygon co-founder Mihailo Bjelic might have said it best when talking about what Web3 needs. For a blockchain to become the "holy grail of Web3 infrastructure" it must have "scalability, security, and Ethereum compatibility." If Web3 is to support all the internet users of the world, it must remain fast and cheap. With Polygon, that now becomes possible.

Arweave

Last but not least is Arweave. In a world full of data, that data needs a home. Arweave is a data storage solution that uses blockchain technology to provide a simple way to retain information -- forever. The best part about Arweave is that no central authority oversees the data, no one can alter the data once it's on the blockchain. In addition, Arweave is compatible with smart contracts, which means Web3 developers can customize dApps to use the data on Arweave's blockchain. And, in keeping with Web3 principles, that data can't be used to generate profits because it's anonymous, and it can never be altered because it's secure on a blockchain. 

To understand how Arweave could benefit investors, we must first understand how Arweave works. We will keep it simple, but to store data on Arweave's blockchain, users must purchase storage space with the AR coin. A user could be a regular person wanting to save a cherished photograph or another blockchain wanting to store its transaction history to free up space. The thinking is that as Arweave's blockchain grows and supports more data storage for Web3, the AR coin should rise in value as demand for it grows.

Imagine entering the metaverse through glasses or virtual reality goggles and, as on the home screen on your phone, seeing all your favorite apps and games there waiting for you. Those apps and games all communicate with each other seamlessly to provide a unique experience just for you without the need of any Big Tech company. Your bank account, photos, and other information are all stored on the blockchain and are completely secure and anonymous.

Web3 is far from its final form, and it's difficult to guess just what it might look like, but that is why investors have so much to gain right now. As the internet continues to evolve, investors can take advantage of a trend that has the potential to become the status quo. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Crypto investors managed to escape much of the pain in the last quarter that afflicted the market in the first six months of the year as markets repriced in the face of fast-rising inflation and interest rates.

Not that most digital tokens shot the lights out.

But many, like Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH), did manage to outperform the S&P/ASX 200 Index (ASX: XJO) in Q1 FY23.

Of course, that's all virtual water under the bridge.

The question on cryptocurrency investors' minds now is what to expect in the quarter ahead.

The biggest concern for crypto investors

For some expert insight into that answer, we turned to Josh Gilbert, market analyst at eToro, and Ray Brown, head of marketing at CoinSpot.

Josh Gilbert said that inflation figures out of the United States, the world's biggest economy, will play a critical role in determining the returns from cryptos in Q2.

"The biggest concern for crypto investors moving into this quarter is that inflation continues to stay at stubbornly high levels," he told The Motley Fool.

"If this is the case, the US Federal Reserve will likely hike rates more aggressively in November and December or continue raising rates into 2023."

The pain in crypto and equity markets from the aggressive central bank tightening to bring down inflation, however, comes with a virtual silver lining.

Gilbert said this is "expected to de-risk markets" and "hopefully allow more volatile assets like cryptos to perform better".

However, until the market has some clear indications of an improving macro picture, he expects cryptos will "continue trading in the tight range we have seen in the last month".

Institutional support

Despite a big retrace in digital token prices in the first half of the calendar year, corporate interest in the space remains fairly robust.

According to Gilbert:

Institutional investment into crypto and blockchain technology is still happening, despite market weakness. The bear market may have stopped enterprises from adding crypto to their balance sheets, yet we continue to see names from Blackrock to Gucci and tech behemoths such as Alphabet investing billions into blockchain, Web 3.0 and DeFi innovation.

He added that "the foundations are being laid even during a bear market to help these assets thrive when the market upturn eventually arrives".

Mainstream crypto adoption on the radar

Ray Brown agreed that the outlook for crypto in Q2 will be heavily influenced by rates.

"Factors like high inflation and continued interest hikes could see investors remain conservative," he told us.

"But if practical uses for the new, environmentally-friendly Ethereum blockchain continue to appear – and gain mainstream adoption – investors hope to see movement in the market."

Ethereum, if you're not aware, underwent a major change in September, switching from a proof-of-work to a proof-of-stake protocol. This sees the blockchain using 99% less electricity.

Brown also pointed to the crypto trial program the Reserve Bank of Australia (RBA) is launching in the last month of Q2 as something that could impact the market:

The RBA is in the process of identifying a use case for a central bank digital currency in Australia. A trial program is commencing in December 2022 that will continue through to Q4 of the 2023 financial year.

It's unclear what the precise outcome of this pilot will be. But the growing volume of research into crypto use cases, coupled with inevitable regulatory changes, seems to indicate further adoption of cryptocurrency-based solutions in Australia is on the horizon.

Then there's the world's richest man. Elon Musk, known to have a major influence on crypto prices like Dogecoin (CRYPTO: DOGE) with a single tweet, again looks locked into buying Twitter.

"With Elon Musk also returning to his US$44 billion Twitter deal and his support towards investing in crypto, there is also speculation that he will add tipping and payment functions to Twitter, enabling users to send crypto," Brown said.

The post This is the biggest concern for crypto investors heading into the new quarter appeared first on The Motley Fool Australia.

What happened

Several cryptocurrencies rallied Tuesday morning based on buyers' hopes that the Federal Reserve, which has been aggressively raising interest rates this year, could ease back a bit from its hawkish monetary policy.

As of 10 a.m. ET, the price of the world's largest cryptocurrency by market cap, Bitcoin (CRYPTO: BTC), was up by 4.8% over the previous 24 hours, hovering around $20,000. The world's second-largest cryptocurrency, Ethereum (CRYPTO: ETH), was 4.2% higher, and the price of XRP (CRYPTO: XRP) was up 6.8%.

So what

Investors have the Reserve Bank of Australia to thank for sending stocks and cryptos higher Tuesday morning after it raised its benchmark rate by 25 basis points (0.25 percentage points) when most experts had expected a 50-basis-point hike. Philip Lowe, governor of the Reserve Bank of Australia, attributed the smaller move to the fact that policymakers have already hiked rates "substantially in a short period of time."

Furthermore, Lowe and his colleagues are starting to get concerned about the economic outlook and how these rate hikes will affect consumers once their full impact is realized.

"One source of uncertainty is the outlook for the global economy, which has deteriorated recently. Another is how household spending in Australia responds to the tighter financial conditions," Lowe said in a statement. "Higher inflation and higher interest rates are putting pressure on household budgets, with the full effects of higher interest rates yet to be felt in mortgage payments."

Fast-rising interest rates have been a massive headwind for crypto and most other risky assets, and have prompted huge declines in their valuations. The U.S. Dollar Index, which tracks the U.S. dollar against other currencies, has also fallen in recent days. That's another positive for crypto because Bitcoin tends to have an inverse relationship with the dollar.

Despite the news out of Australia, the Federal Reserve is still expected to implement two more big rate hikes before the year ends, although it is possible that plan will change as new data on inflation comes in.

In other news, XRP, the cryptocurrency developed by the founders of Ripple Labs, continues to make gains as it barrels toward what looks to be a favorable outcome in a nearly two-year legal battle that could soon be coming to a conclusion.

The Securities and Exchange Commission (SEC) sued Ripple Labs in 2020 for not registering XRP as a security when it raised funds in 2013, and for not providing enough transparency to investors. But it seems like the SEC is starting to back off. Last month, both Ripple and the SEC submitted filings asking the U.S. District Court for the Southern District of New York to make a summary judgment on the case.

Recently, Judge Analisa Torres ruled that the SEC needs to release documents from a former director, who may have previously written in a speech that he does not believe Ethereum is a security -- a piece of evidence that Ripple believes is vital to its case.

Furthermore, SEC Chairman Gary Gensler said at a recent conference that he thinks Bitcoin and Ethereum should be regulated by the Commodities Futures Trading Commission, which crypto advocates would prefer to them being regulated by the SEC.

Now what

While I am not convinced that the Reserve Bank of Australia's smaller-than-expected rate hike means the U.S. Federal Reserve will ease up in its war on inflation, I'm hopeful that we'll see a more positive inflation report on Oct. 13, which could help the narrative.

Still, I've been impressed with Bitcoin's ability to hang around the $20,000 level, and I ultimately think Bitcoin and Ethereum will prove to be good long-term buys. I also think XRP is headed toward victory in its nearly two-year-long legal battle, which bodes well for that token. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why Bitcoin and Ethereum are rising today appeared first on The Motley Fool Australia.

The Federal Reserve's aggressive monetary stance in 2022 has caused investors to reassess their appetite for risk, leading to a plunge in the most speculative assets out there, a category that cryptocurrencies undoubtedly belong in. 

Even the second-biggest cryptocurrency by market cap, Ethereum (CRYPTO: ETH), hasn't been immune to the general market's weakness. The popular crypto is down 64% this year (as of this writing), but a recent catalyst could drive investor interest to new heights. 

With The Merge now complete, is this a good time to buy Ethereum? Let's take a closer look. 

Changing the consensus mechanism 

For its entire history (up until a couple of weeks ago), Ethereum operated what is called a proof-of-work (PoW) system. This requires so-called miners to use massive amounts of electricity to power computers to solve complex math problems, earning the right to validate new transactions on the blockchain. Bitcoin, the world's most valuable cryptocurrency, operates with PoW. 

Detractors point to the fact that PoW is energy-intensive and not really scalable. Bitcoin uses the same amount of energy as a small country. Furthermore, it can only process three transactions per second (TPS). 

As a result of these perceived limitations, developers have transitioned Ethereum to run on a proof-of-stake (PoS) consensus mechanism. PoS allows token owners to lock up, or stake, their ether tokens to help validate new transactions and secure the network. Moving to proof-of-stake was seven years in the making, so its long-awaited completion demonstrates exactly how complex and groundbreaking the move was. 

According to its official website, Ethereum's energy use has now been cut by 99.95%, a statistic that is sure to please environmentalists in both the government and the crypto community. Additionally, moving to PoS paves the way for Ethereum's network to implement sharding in 2023, an update that will split and distribute the network load across side blockchains. Think of it like adding more lanes to a highway. The result is a huge potential increase in throughput to the tune of 100,000 TPS. 

However, a valid argument can now be made that PoS makes Ethereum's network more centralized, as it is estimated that 43% of all staked Ethereum is held by two entities right now -- crypto exchange Coinbase and Lido DAO, a decentralized staking solution designed for Ethereum. This could lead to problems down the road that are at odds with the core tenet of decentralization that blockchain technology promises. For example, Coinbase and Lido could have undue influence over Ethereum in the future, affecting things like transaction approvals and governance strategies. 

Nonetheless, Ethereum is now in a position to scale better thanks to its switch to PoS. And this could lead to even greater adoption with the continued popularity of decentralized applications such as decentralized finance (DeFi) protocols and non-fungible tokens. 

Investors should weigh the options 

Of the cryptocurrency networks out there that incorporate smart contracts, Ethereum is the most attractive for investors because of its deep developer ecosystem. According to venture capital firm Electric Capital, Ethereum had the most developers working on it at the start of the year. And with sharding on the horizon in 2023, it's not hard to see even more developers flocking to work on advancing Ethereum. 

Other popular cryptos that have already been operating a PoS system are Cardano and Solana. Both of these have their own special characteristics that investors could find appealing. Cardano is known for having a deliberate, calculated, and research-based development process. And Solana, with the theoretical capacity to process 50,000 TPS, could disrupt the payments industry. 

Therefore, investors are presented with the option of buying a basket of these interesting cryptocurrencies, all with their own unique attributes and potential use cases, or perhaps putting their entire crypto allocation into Ethereum. Experts believe that it's too early to tell what the exact implications of The Merge will be, but it certainly could prove to be a long-term catalyst that drives the price of Ethereum higher over time. 

With Ethereum's price down 25% over the past couple of weeks, investors who have been on the sidelines might want to jump in and buy some of this top cryptocurrency. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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What happened

Several of the largest cryptocurrencies have jumped higher today as investors digest monetary policy and also monitor the foreign exchange markets, which have been active lately.

Over the last 24 hours, the price of the world's largest cryptocurrency, Bitcoin (CRYPTO: BTC), has traded roughly 5% higher as of 10:27 a.m ET. The price of the world's second-largest cryptocurrency, Ethereum (CRYPTO: ETH), traded roughly 4.1% higher, and the price of Solana (CRYPTO: SOL) was up 5%.

So what

Cryptocurrencies have struggled as the Federal Reserve has raised its benchmark overnight lending rate, the federal funds rate, aggressively this year, making riskier assets like cryptocurrencies less appealing. The Fed did a 0.75% rate hike at each of its June, July, and September meetings, and the Fed's median forecast shows that another jumbo 0.75% hike could happen before the year is over.

But recently, the price of Bitcoin has split off from those of other cryptocurrencies and tech stocks. For much of the year, the two have traded similarly. However, over the last five days, the price of Bitcoin, which is back above $20,200, has risen about 5%, and the Nasdaq Composite has fallen about 4.6%.

Analysts seem to think that crypto investors are now turning their attention to the foreign exchange markets, which have been dominated by an incredibly strong U.S. dollar, which not too long ago overtook the euro. The U.S. dollar has also overtaken the British pound sterling, which has hit a record low.

A strong dollar has contributed to Bitcoin's struggles this year because cryptocurrency is an alternative to traditional currencies and therefore moves inversely to the dollar. Vijay Ayyar of the international crypto exchange Luno said he thinks the dollar index, which measures the U.S. dollar against other currencies and has risen 18% this year, could be nearing its peak.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why Bitcoin, Ethereum, and Solana moved higher on Tuesday appeared first on The Motley Fool Australia.

The price of Bitcoin (CRYPTO: BTC) is treading near its lowest level in the past 12 months. After failing to continue its rebound in August, demand for the weathered crypto asset has waned.

Today, Bitcoin is hovering around US$18,780, down a gut-wrenching 73% from its 52-week high. The harrowing fall has coincided with monetary tightening by central banks around the world. As a result, liquidity for this alternative has evaporated right in front of our eyes.

At the same time, greater scrutiny around proof-of-work (PoW) — Bitcoin's consensus mechanism — has increased awareness of Ethereum (CRYPTO: ETH) and its recently adopted proof-of-stake (PoS) mechanism. The Ethereum network now uses approximately 99.95% less energy post-merge.

But here's why I continue to hold Bitcoin… and no, I don't hate the environment.

Why I still see value in Bitcoin

We have all seen them, the comparisons of Bitcoin's network energy consumption relative to whole countries.

According to estimates by the University of Cambridge, the network is currently operating on annualised energy consumption of approximately 93 terawatt-hours (TWh). This would put the decentralised blockchain's consumption roughly on par with all of Pakistan.

Though, I personally don't consider this a negative if there is something of a corresponding value from it. In this case, the value proposition is a highly secure, immutable, and deflationary form of monetary exchange.

For context, YouTube demands around 244 TWh per year — pictured below — and no one bats an eye. Why is this? Because instant access to a library of content at your fingertips has value… immense value.

In the same way, I believe there is a huge need for a means of exchange that is governed by a decentralised cohort, accessible globally, and eliminates the inequality-inducing economic problem of inflation.

But why not Ethereum? And I agree, Ethereum has great value in its own right — bringing decentralisation to all forms of finances. However, in the process of converting to PoS, I personally believe the network removed an important tangible aspect.

To be fair, Ethereum has implemented some highly sophisticated tech that should maintain network security. However, there is something to be said for a network — such as Bitcoin's — that is reliant on something that cannot be imitated, created, or destroyed… real and tangible energy.

I'm still in the process of understanding all the intricacies of Ethereum 2.0.

Simple and stable

Speaking of intricacies… another reason why I personally still hold Bitcoin is because of its relatively straightforward concept. As my engineering days taught me: the more parts, the more points of failure.

While Ethereum quite honestly needs to be complex to achieve its goal, a decentralised store of value doesn't need to be. And, quite frankly, if I'm keeping a large sum of money there, I don't want it to be either.

Each time a protocol undergoes a change, it presents a risk. Thankfully, Ethereum successfully completed 'The Merge' unscathed, but there were likely a few people sweating in the process.

In contrast, Bitcoin rarely makes substantial changes to its foundational code. Personally, this is another reason why I like it as an alternative store of value. It may not be as 'smart' as Ethereum, but it sure is reliable.

The post Bitcoin isn't as 'smart' as Ethereum… and that's why I hold it appeared first on The Motley Fool Australia.

Throughout 2022, one of the industries that has been affected the most by supply chain disruptions and inflation is the semiconductor industry. As if navigating these economic headwinds weren't challenging enough, the federal government recently imposed restrictions on the sale of chips designed by the likes of market leaders Nvidia (NASDAQ: NVDA) and Advance Micro Devices, Inc.(NASDAQ: AMD) to China and Russia, citing national security threats. This news came one week after Nvidia's lackluster second-quarter fiscal 2023 results.

The company's earnings flop and the new sale restrictions led some investors to dump Nvidia stock. As a result, Nvidia plummeted to a new 52-week low. While the company seems to have a mountain to climb, there are several reasons investors may want to take a second look at Nvidia. One of the most interesting aspects of semiconductors in general is how central the products are to power industries such as cryptocurrency, big data, and gaming. Despite subpar results in its latest earnings, Nvidia has several tailwinds that could propel the company forward in the long run.

Peeling back the onion  

Nvidia reports its revenue in two primary segments: graphics and compute and networking. For the second quarter (ended July 31), Nvidia reported $2.8 billion in graphics revenue, which represented a 28% decline year over year (YOY). By comparison, the company's compute and networking segment generated $3.9 billion in quarterly revenue, up 50% YOY. Given the disparity between these two primary segments, prudent investors may want to take a deeper dive into Nvidia's five market platforms, which combine to form the two main segments. 

The table below illustrates Nvidia's five market platforms and the respective growth profile of each:

Investors can see that Nvidia's gaming and data center businesses combine to form the majority of the company's revenue. The data center business grew by a whopping 61%, reaching $3.8 billion in revenue. According to management, the increase in data center revenue was driven by the company's hyperscale business doubling. Hyperscale data centers are much larger than traditional data centers and typically outperform them because of the volume of data they can process and the superior storage services they can provide. As corporations of all sizes become more reliant on data to make decisions, it is not surprising to see Nvidia benefit from this tailwind.

It is important to note that Nvidia's management explained to investors that while hyperscale customers increased in North America, the company's business in China slowed down significantly due to lingering economic challenges from the pandemic.  

While Nvidia is far from the only technology company that faced revenue challenges in certain geographic regions, the company may be facing a longer period back to robust growth -- alongside other tech companies -- given the federal government's recent mandate prohibiting the sale of chips and data processing products to China and Russia. While this might spook some investors easily, we must remember that Nvidia is a global organization with several different operating segments. Although its hyperscale data center business is likely to face some near-term headwinds, the company has several other end markets it can benefit from. 

Is gaming just a fad?

Nvidia's gaming segment generated $2.0 billion in quarterly revenue, down 33% YOY. The gaming segment is interesting because it serves as the nucleus to so many other industries, such as personal computing, graphics cards, and cryptocurrency. In fact, one of Wall Street's most highly regarded technology analysts, Gene Munster, recently said during an interview with CNBC that for Nvidia's business, the term "gaming" is code for "crypto."  

Although the diminishing enthusiasm for crypto has affected the sale of high-end computer hardware, it is important to understand that the economic challenges companies and investors alike are facing will eventually subside. Stated differently, investors should use a long-term time horizon when analyzing an investment. While the company's gaming segment has slowed down materially, it is highly unlikely that the crypto market or demand for graphic processing units (GPUs) has been permanently destroyed.      

Year to date, leading crypto tokens Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH) are down 60% and 64%, respectively. Given the volatility of the stock market and the general economic outlook, many investors have trimmed positions in equities and alternative assets such as cryptocurrency in an effort to flock to cash as a safe haven.

Keep an eye on valuation

The entire year of 2022 has been rough for Nvidia. Earlier this year, the company scrapped its plans for its proposed megamerger with competitor Arm Semiconductor. Additionally, economic conditions in China due to the pandemic have affected the company's data center business. Moreover, the federal government has banned Nvidia from selling certain products to China and Russia, citing national security concerns. Lastly, the cratering crypto market has significantly affected demand in Nvidia's gaming division. All of these hiccups have contributed to a massive sell-off, with the stock hitting a 52-week low last week. 

But even with all of that said, some on Wall Street remain bullish. Mizuho analyst Vijay Rakesh recently reiterated a buy rating on the stock, citing strong demand in the hyperscale business. Additionally, several investors on a CNBC panel recently claimed that given management's weak guidance for the next quarter, the stock is likely not headed higher anytime soon. For this reason, Nvidia could soon be a compelling buy.

The most prudent action for investors is to assess the company's next-quarter results and pay close attention to management's guidance as we head into next year. Should Nvidia stock continue to slide over the next few months, investors with a long time horizon may have a lucrative chance to lower their cost basis before the stock rises again.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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