Over the past few months, the stock market and cryptocurrencies have seen a lot of volatility. In this clip from "The Crypto Show" on Motley Fool Live, recorded on March 23, Fool.com contributors Chris MacDonald, Travis Hoium, and Jon Quast discuss the recent uptick in crypto's market capitalization and what it means for investors.
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Chris MacDonald: Yeah, it's really interesting. When you zoom out on this chart, I guess in most charts, it doesn't actually look that volatile. I mean, in terms of market capitalization of the whole sector, we're back to roughly where we were a year ago, a little bit higher. But from a month-to-month perspective, this is a very volatile asset class. You can see various peaks and valleys. The market peaked in November, around $3 trillion, and dropped in late January to about $1.5 trillion.
So the entire crypto market basically sold off 50%. We're back at $2 trillion now, or as of yesterday, today we're a little bit below that level. But the entire crypto market is moving in sync and moving alongside equities, which is something we've seen for the last couple of years. You're right. Specifically, over the past week, Cardano (ADA -1.56%), Avalanche (AVAX 4.51%), and Solana (SOL -2.38%) have soared 30%, 21%, and 14% respectively. Ethereum as well, moving above the $3,000 level.
The entire market is getting a boost right now. It looks like some risk on sentiment in the market. Investors are a little bit more keen to buy the dip, seeing valuations improve. But it is interesting because interest rates, Jerome Powell came out saying he is open to a 50-basis point hike. To be honest, it's a real interesting time and personally, for me, it's a little bit of a head-scratcher in the market, but that's what it is right now. At a high level, I think it's important to zoom out and look at these metrics, especially in a time like this.
Travis Hoium: The other thing to add to that is that I hate to call it regulatory because there wasn't actually any regulation that came out in the U.S., but there was the executive order from the White House, seemed to be generally positive for the crypto industry. I think that is kind of causing some tailwinds here, but I think you're right. There's just a lot of things going on and generally, if you want to have a blanket statement, it would be a risk on trading. So that makes sense. But that can reverse just as quickly as it comes.
Jon Quast: Chris, I want to circle back to something that you just said regarding this. As you look at the overall macro environment, you would expect people to maybe be a little bit more risk-averse and we're seeing that maybe investors are taking on a little bit more risks. Just to keep things in perspective, I've seen many of my own stocks, for example, jump significantly over the past 10 days or so.
Then I look at stocks of other companies like AMC (AMC -3.68%) and GameStop (GME -5.13%) and they're also up big, and then I think, OK, maybe I shouldn't get too excited about the movement in the stocks that I own. Maybe I should just zoom out a little bit, not get so excited about the short-term price action and be more focused on those long-term business results.