Just as the stock market took back some of its losses Monday, the much beleaguered crypto market had a rally of its own.
After weeks of bad news and falling prices, the total market capitalization for crypto assets climbed to more than $1 trillion for the first time in about five weeks Monday morning.
Bitcoin, the largest cryptocurrency by market cap, was up more than 7% and trading above $2,300 early in the day for the first time since mid-June. Bitcoin has shown tendencies to rise and fall with the public stock market.
Similarly, Ether also saw significant gains, rising more than 12% and trading above $1,500 for the first time since mid-June.
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Ether’s rise may have been buoyed by Ethereum’s continued progress toward its software transition from using proof-of-work to proof-of-stake to validate transactions. The blockchain successfully tested the transition—or “merge,” as it is called—earlier this month and the move to proof-of-stake could come as early as late next month.
The change is significant as proof-of-work consensus is energy-intensive and therefore considered by many to be environmentally unfriendly.
The crypto rally may be just a dead cat bounce, or it could be a sign investors think the worst is over—or at least coming to an end.
The second quarter was brutal for the crypto market. Values of Bitcoin and Ether fell more than 70% from November highs. The industry also saw one of its stablecoins completely collapse. Additionally, large lending platforms Babel Finance and Celsius Network suspended withdrawals and transfers due to market uncertainty and liquidity issues—leading Celsius to file for bankruptcy last week.
The hits didn’t stop there, as notable crypto hedge fund Three Arrows Capital, also known as 3AC, collapsed after the downturn in digital currencies left it unable to meet obligations. The firm, which managed about $10 billion in assets as recently as March, filed for Chapter 15 bankruptcy protection on July 1.
Illustration: Dom Guzman
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