Cryptocurrency Update: Bitcoin, Ethereum, and Dogecoin Rise Amid Market Optimism

Cryptocurrencies Bitcoin, Ethereum, and Dogecoin rose on investor optimism following positive macroeconomic news about U.S.-China trade relations. Bitcoin is acting as a risk asset linked with equities rather than as a traditional hedge. Ethereum and Dogecoin’s future remains uncertain without substantial improvements in their utility and fundamentals.

On Wednesday, investors actively purchased risk assets, including cryptocurrencies like Bitcoin, Ethereum, and Dogecoin, following a substantial increase on Tuesday. These assets, which often exhibit strong correlations, experienced significant upward movements, largely influenced by macroeconomic factors rather than direct developments in the crypto market itself. Specifically, Bitcoin (BTC) rose by 2.9%, Ethereum (ETH) by 5.1%, and Dogecoin (DOGE) by 6.2%.

Speculation regarding the de-escalation of the trade war with China has impacted market behaviour. Treasury Secretary Scott Bessent hinted at potential reductions in tariffs on imports, leading to alleviated concerns about a possible U.S. recession. As worries about the trade war ease, there is optimism that the economy may improve, positively affecting markets, including cryptocurrencies.

Bitcoin’s recent surge indicates that it is moving in tandem with growth and technology stocks, rather than acting as a hedge against market fluctuations. In contrast, gold has seen a decline of 3.3%, showcasing Bitcoin’s lack of functionality as a traditional inflation hedge or reliable store of value during turbulent market conditions.

The outlook for Ethereum and Dogecoin remains more ambiguous compared to Bitcoin. Despite having significant blockchain utility, Ethereum has lagged behind Bitcoin due to slow improvements in transaction speed and costs, with competitors like Solana (CRYPTO: SOL) gaining traction. Dogecoin, although popular as the first meme coin, has seen over a 50% decline since its post-election highs and lacks a solid use case to boost its value.

While today’s gains may reflect momentary bullish sentiment, the crypto market is anticipated to continue its volatility paralleling growth stocks. Bitcoin has struggled to maintain its position as a recognised store of value, particularly after price fluctuations linked to new tariffs. Meanwhile, Ethereum and Dogecoin need to demonstrate enduring developments in utility to maintain their relevancy as market conditions evolve.