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Why Bitcoin, Ethereum and Polygon Jumped Today?

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What happened

The cryptocurrency market rose sharply on Thursday morning as investors appreciated more stability as we have seen in weeks. Celsius Network, a leading cryptocurrency lender and finance company, has officially filed for bankruptcy protection, and Ethereum (ETH 12.28%) approaches its proof-of-stake consensus mechanism. Sometimes, simply reducing the uncertainty is enough to push crypto higher.

In the last 24 hours, as of 2 p.m. ET, the value of Bitcoin (BTC 5.59%) was up 4.7%, Ethereum was up 10.1%, and polygon (MATIC 21.31%) had jumped 21%.

So what

The biggest news is that Celsius Network filed for Chapter 11 bankruptcy protection in the US, which at least put an end to speculation about the company’s future. Management said it has $167 million in cash to fund operations, but client funds will now be part of the Chapter 11 process and will not be available on a first-come, first-served basis.

As bad as it is for a company to file for bankruptcy protection, it brings the Celsius Network saga to a conclusion of sorts. The company’s position will not be corrected, and creditors will be paid back. Eventually, some customers may even get their money back.

In more meaningful news, Ethereum’s ninth shadow fork has gone live, continues to test its proof-of-stake consensus mechanism and moves closer to the merger of its testnet and mainnet. Investors are anticipating the upgrade as it is supposed to reduce transaction costs for Ethereum and increase the number of transactions that can be done per second.

The crypto boom is even more shocking when you consider that the US stock market and global commodity markets are down significantly today. As I’m writing, stock indexes are down about 1%, while gold and oil are down 1.6% and 1.3%, respectively.

now what

It is still likely to take some time for the positions created by the Celsius network to expire, but at least there is a way out for now. This is what makes the market happy, and I think it can reduce the amount of leverage in the crypto market overall.

If Ethereum can complete the move to proof of stake and reduce costs and increase blockchain throughput, it could be a game changer. It is still the largest developer network in the world of cryptocurrencies, and reducing costs will increase the number of use cases available.

The volatility is likely to continue over the next few months, but the collapse of some of these leveraged trading platforms, which did little to add utility to the crypto industry, could be a bump in the road. Long term, the crypto industry will be about building new, disruptive technology – not new ways to trade assets – and today’s news moves everyone closer to that.

Travis Hoium has positions in Ethereum. The Motley Fool positions and recommends Bitcoin, Ethereum and Polygon. The Motley Fool has a disclosure policy.

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