(Bloomberg) -- Bitcoin and Ether, the world’s two largest digital tokens, are headed toward their best months since 2021 amid a revival of risk appetite in global markets and optimism about an Ethereum network upgrade.

Bitcoin is up 28% in July and Ether 72%, though the rallies paused Friday. Bitcoin was trading at $23,950 as of 2:12 p.m. in Tokyo and Ether at $1,732.

A US economic slowdown is leading investors to the view that the Federal Reserve will be done raising rates by year-end and pivot to cutting borrowing costs in 2023, creating a more favorable liquidity backdrop for speculative assets.

“Signs the Fed may be nearing the end of their hiking cycle have lifted all risk assets, and crypto has also benefited,” said Cici Lu, chief executive officer at consulting firm Venn Link Partners. “Liquidation of leveraged positions seems to be over,” she added, and “markets may have found the bottom.”

Cryptocurrencies are trying to recover from a rout this year that’s wiped more than 50% off the MVIS CryptoCompare Digital Assets 100 index. Virtual coins were buffeted by the Fed’s shift to monetary tightening and ensuing leveraged blowups, such as crypto hedge fund Three Arrows Capital.

The Ethereum blockchain is due to move to a more energy-efficient so-called proof-of-stake system. That’s been a tailwind of late for its native token, Ether.

The virtual coin could push toward $1,915 to $2,000 in the days ahead, according to Mark Newton, head of technical strategy at Fundstrat.

“Ethereum looks more attractive technically than Bitcoin in the short run, so pullbacks into mid-August should be buyable,” he said.

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