Key Points
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The tariff reduction between the U.S. and China has caused a "risk-on" trade for the market and that's pushing cryptocurrencies higher.
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Upgrades to Ethereum have helped that token be one of the hottest on the market over the past week.
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.
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.