Why Cryptocurrencies and Crypto Stocks Were Bouncing Higher on Tuesday

A combination of lingering good sentiment and company-specific news was lifting cryptocurrencies and associated stocks higher on Tuesday. For the former, we didn't see many dramatic price leaps, yet it seems the latest rally still has some mileage to it.

The day really belonged to the crypto stocks, with Mara Holdings (NASDAQ: MARA) closing a sturdy 10% higher, and all-in Bitcoin (CRYPTO: BTC) investor MicroStrategy (NASDAQ: MSTR) booking a 12% increase.

A clutch of cryptocurrencies was trading in positive territory late that afternoon, albeit not at such impressive rates. Among the gainers were Hedera (CRYPTO: HBAR) and Mantra (CRYPTO: OM).

It stands to reason that the crypto stocks took the spotlight Tuesday, as their news was more immediate and dramatic. Both Mara Holdings and MicroStrategy provided updates about their funding, and investors cheered the fact that they'll have more capital to spend on buying more Bitcoin, still by far the world's most popular digital coin.

Mara Holdings' financing news was arguably more impressive. Last night, the company announced that it was upsizing its previously announced issue of convertible notes (debt securities that convert into equity under certain conditions) in a private offering. It will issue $850 million worth of convertible senior notes due in 2030, and paying quite a favorable (for the company) interest rate of 0%.

The initial buyers of the notes will have an option to purchase an additional $150 million worth of the securities. Originally, Mara Holdings was looking to raise $700 million. The company aims to use around $199 million to repurchase existing convertible notes and the rest to buy Bitcoin.

As for MicroStrategy, it hasn't (yet) upsized its own financing effort, yet it stands to bring in far more capital. The company announced just after market close Monday that it's floating $1.75 billion in convertible senior notes due in 2029, which, like Mara Holdings, have a 0% interest rate. It expects to grant initial purchasers an option to collectively buy an additional $250 million worth.

MicroStrategy will use its proceeds to -- you guessed it -- purchase Bitcoin.

A good time for a rally

That kind of liquidity flowing into only two companies, on its own, will help -- at least -- to support the price of Bitcoin, and perhaps extend the current crypto rally. And if Bitcoin is doing well, you can be sure that altcoins will generally follow along, as they do.

All this is occurring in an environment of great optimism, with an incoming presidential administration clearly favorable to the crypto industry and a macroeconomy that seems to be taming the beast that is inflation. Times are good for cryptocurrencies, and it seems there are plenty of investors willing to get in on the action.

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Eric Volkman has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool recommends Hedera Hashgraph. The Motley Fool has a disclosure policy.