What happened

Today's price action in the cryptocurrency market has been notable, especially when investors compare these digital assets to stocks. The divergence between these two asset classes has been building, with the crypto market seeing gains of 4.5% over the past 24 hours, while most major stock indices have declined around 1% in early-afternoon trading. 

Leading the way in today's crypto rally are Chainlink (LINK 0.25%), Polkadot (DOT -1.85%), and Fantom (FTM -0.65%). As of 12:30 p.m. ET, these three tokens have surged 6.4%, 4.8%, and 9.9%, respectively, over the past 24 hours. 

So what

Many of today's moves with these three tokens appear to be driven by increasingly bullish sentiment building among crypto investors. A number of bankrupt firms have seen their holdings increase in value over the past day, providing reprieve from expectations that contagion fears could continue to bleed into crypto valuations.

This view has been bolstered by another bank rescue, in which a $30 billion lifeline was provided to First Republic Bank. This unsecured credit line, provided by a consortium of the largest U.S. banks, was made in a bid to stave off contagion fears, which could have taken the bank down.

With a number of crypto-related banks closing their doors over the past 24 hours, contagion fears remain high. That said, if regulators are keen on reining in contagion fears, risk assets such as cryptocurrencies could have the most to gain, given their status as higher-volatility assets.

Now what

Many in the crypto community have been pushing back against regulators, who some believe have allowed the failure of banks with close ties to crypto while saving other banks with smaller exposure to this asset class. The Blockchain Association has sent an FOIA request to the Federal Reserve, FDIC, and OCC today, requesting information around "the unlawful debunking of crypto companies." Thus, it appears there's some pushback from crypto investors with respect to how this banking debacle has been handled.

Contagion fears in the market remain high, evidenced by today's poor performance in equity markets. However, the impressive surge in valuations across most major cryptocurrencies today suggests investors may be looking to diversify out of traditional assets into assets with less banking exposure.

Given the fact that many of the traditional finance rails that were previously provided to investors have collapsed, maybe that's a good thing for crypto. Today, that appears to be one of the key ideas driving these digital assets higher.