Ethereum Heats Up to Lead Crypto Higher

The crypto market has been on a tear over the past week and had a great weekend as news broke that tariffs would be reduced between the U.S. and China. But the trade started to unwind as crypto fell, starting shortly after trading began on Wall Street on Monday.

Ethereum (CRYPTO: ETH) has been the biggest mover of the major tokens, gaining as much as 12% in trading since Friday's market close and has risen 34.2% in the past week. Dogecoin (CRYPTO: DOGE) is leading the meme coins with as much as a 22.3% gain since Friday and a 33.5% increase over the past week, while Cardano (CRYPTO: ADA) jumped 9.5% over the weekend.

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Tariff news and the "risk-on" trade

The move in crypto since Friday has been based on increasing speculation a trade deal would be announced between the U.S. and China. Negotiations took place over the weekend in Geneva, Switzerland, and resulted in a reduction of tariffs on U.S. imports from China from 145% to 30%.

What the market was worried about was tariffs collapsing the global economy, which seems less likely for now. The reduction in tariffs will last for 90 days while negotiations continue, but we're back to near where tariffs were before the April 2 tariff announcement.

For most cryptocurrencies, this jump in value has come as a bounce off of lows as the market puts a "risk-on" trade on.

Ethereum's upgrades

The gains are welcome for Ethereum, which fell more than 50% between December and April's lows. The blockchain has struggled with high costs and slow speeds for years but that has become a real problem recently as transaction demand has increased, pushing users and developers to other blockchains.

After completing the recent Pectra upgrade, developers are plotting the Fusaka update that would make it less expensive for Layer-2 blockchains built on top of Base to complete transactions.

Blockchains like Base and Arbitrum have gained wider adoption than Ethereum because they're faster and have lower costs, but their transactions need to settle to the main blockchain eventually. This upgrade would make that process more efficient.

But the update may not come until later this year, at best, and until then Ethereum continues to fall behind faster, less expensive blockchains.

Cardano's privacy focus

Cardano has come back in favor again after founder Charles Hoskinson said it's looking to offer stablecoins that have the same privacy as cash.

Today, all transactions on the blockchain can be seen by anyone, which doesn't provide any privacy once your wallet address is known.

That could give the blockchain an interesting use case as the market expands in crypto.

The crypto trading cycle

Cryptocurrencies continue to follow the moves in growth and tech stocks, and today is no different. But this time around, there are good reasons to be bullish on some of these blockchain improvements.

I think in time, the blockchain will gain market share for financial transactions, but when it does, it may be stablecoins that win, not cryptocurrencies themselves, which is why I'm not buying this bounce today.

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Travis Hoium has positions in Ethereum. The Motley Fool has positions in and recommends Cardano and Ethereum. The Motley Fool has a disclosure policy.