Why is the crypto market booming today?
The market capitalization of all cryptocurrencies rose by 6.50% to $1.7 trillion in the last 24 hours; Top coins Bitcoin (BTC) and Ether (ETH) rose 6% and 3.5% respectively.
Bitcoin ETF approval expectations
A significant driver behind today's rise in the crypto market is the US Securities and Exchange Commission's (SEC) approval of the first position-based Bitcoin ETFs. The market views the approval as a broadening of the investor base, with Standard Chartered predicting that it will bring Bitcoin's price rally to $200,000 by the end of 2025.
Regardless of long-term plans, the intensity of this Bitcoin ETF bidding war is telling me that the bidders believe the winner's lower payout will be offset by HUGE $$ earnings. pic.twitter.com/tzEmHzPsWU
— Tuur Demeester (@TuurDemeester) January 9, 2024
For example, there is a high rate of revenue of $151 million in digital assets investment funds by 2024.
Tech stocks rally, dollar falls
Another contributor behind today's crypto market rally is the rally in tech stocks combined with the weakening US dollar. This aroused the feeling of “at risk”, making cryptocurrencies more attractive as an investment.
Since November 2023, the daily correlation between the crypto market and the tech-heavy Nasdaq Composite Index (IXIC) has been positive. Since then, these markets have gained 40% and 18.5%, respectively. Meanwhile, the US dollar index (DXY) fell 4.45 percent.
Bitcoin will be halved in less than 100 days
With Bitcoin's halving now less than 100 days away, market sentiment is rising. It will cut the new supply of BTC in half, resulting in historically high prices.
Related: Gary Gensler warns on crypto ahead of potential Bitcoin ETF approval
These factors together point to a multifaceted motivation behind the current rally in the cryptocurrency market. The pending SEC decision is particularly critical on Bitcoin ETFs, with long-term implications for market volatility and the investor base.
This article does not contain investment advice or recommendations. Every investment and business activity involves risk, and readers should do their own research when making a decision.
