What happened

There was a big bounce in cryptocurrency values this week as investors begin to see more certainty in the economy globally. Earnings season has helped that, but a big part of the move is driven by slowing inflation and speculation that the Federal Reserve is nearing the end of its interest rate hikes.

Some of the biggest moves weren't among the largest cryptocurrencies today but rather were made by metaverse and utility cryptocurrencies that could have very bright futures. As I'm writing at noon ET on Friday, ApeCoin (APE 2.60%) is up 16.5% since Thursday's close. Axie Infinity (AXS 4.45%) jumped a whipping 24.1%, and NEAR Protocol (NEAR 4.63%) is up 5.5%.

So what

Yuga Labs, which launched the Bored Ape Yacht Club, launched an NFT called the Sewer Pass and a related game last week, which has brought attention to ApeCoin once again. The token is used in the game to buy power-ups and is a reminder that Yuga Labs is building a game that will use ApeCoin in some way.

Blockchain games haven't become very popular yet, but this could be a new age for the industry. Yuga Labs has more public visibility than any other game, and if it's successful, more gamers could move into the space. Axie Infinity is along for this speculative ride for now.

The macro picture is helping crypto as well. The sharp rise in interest rates last year hit the industry hard, not only pushing investors out of crypto but also exposing leverage and risk that was once unknown. Recent data shows inflation slowing, which could cause the Federal Reserve to ease up on interest rates. If we avoid a recession at the same time, it could be great for risky assets like crypto.

Governments have also been taking action regarding how crypto will be regulated in the U.S. and South Korea. In South Korea, the legislature is considering 17 different proposals and seems to be moving forward with comprehensive legislation. In the U.S., law enforcement and regulators are maintaining existing rules for the moment. It could mean projects moving offshore, but at least people will know the rules of the industry.

Now what

A lot of this week's move was speculation about the future adoption of cryptocurrencies and what the market will look like years from now. I don't see the crypto market collapsing from here given that it has survived the implosion of Three Arrows Capital and FTX in the past year. But its recovery might not be immediate, either.

Developers are building the next generation of innovative products for the blockchain, but user adoption is still a long way off. (Remember, it took more than a decade for the internet to really go mainstream.) Crypto might be on a similar path to wider adoption over the next ten years, but it will suffer fits and starts in the meantime. This week was an up week on speculation that the future will be bright, but next week, that sentiment could reverse.