What happened
The bull run has continued for cryptocurrencies on Tuesday with most major cryptos up at least mid-single digits. Investors seem to continue their bullishness ahead of Ethereum's Merge and it helps that there's some positive economic news out recently.
Coinbase Global (COIN -3.44%) was a big beneficiary today, rising as much as 10.3% in trading and moving 9.3% higher as of 12:15 p.m. ET. Shiba Inu (SHIB 4.05%) charged 12.7% higher from its low Monday afternoon to highs this morning, and Polkadot (DOT 1.29%) jumped 10.4% over that time.
So what
For Coinbase, the move is largely because the crypto market is active again, which means more trading fees will be generated, and the company appears to be taking market share. According to CoinMarketCap, Coinbase's exchange volume is up 32% in just the last 24 hours to $3.2 billion, which puts it ahead of FTX in the exchange market. Coinbase makes money on transaction volume, not the price of cryptocurrencies, so this increase would be good for the business.
Shiba Inu and Polkadot are up on the broader crypto move and a rise in the stock market. Values of these tokens aren't directly impacted by Ethereum's Merge outside of potentially bringing more people into cryptocurrency.
It certainly helps that major stock indexes are up big today. The Nasdaq Composite is up 2.4% as I'm writing and the S&P 500 is up 2.1%. Crypto values tend to exaggerate the market's move because they're considered higher-risk assets, so the stock market's move is certainly helping.
Now what
I don't think today's move is particularly meaningful for Shiba Inu or Polkadot because they're just following the market overall. But Coinbase could be in a different position. If the crypto market comes to life again and trading revenue increases, Coinbase could have a much better second half of the year than investors expect.
What I'll be watching for is the continued volume of trading and number of users in the crypto industry. If the industry overall grows it would be good for Coinbase and potentially cryptocurrencies.
We may also be seeing some increased stability after multiple major liquidations began in the crypto market. The bankruptcy of Three Arrows Capital led to a number of loans and risks being uncovered, but the fallout seems to be better understood today than it was a few weeks ago.
Long term, this is still an industry to like because of the disruption that could come from crypto, but it's a volatile ride and for now that means big moves higher for investors.
