Sokipiriye Dokubo
The cryptocurrency market has experienced a significant uptick driven by signs of seller exhaustion and a strong technical setup prompting traders to enter new positions. The total market capitalization has increased by about 2% in the past 24 hours, reaching $2.32 trillion as of July 1. This surge includes gains from Bitcoin (BTC) and Ether (ETH), which have both risen by approximately 2.5% and 2.2% respectively.
Factors Fueling the Market Rally
Macroeconomic Policy Divergence and Inflation
An analysis of the recent crypto market performance suggests a growing strength since the Federal Open Market Committee (FOMC) meeting on June 12. The FOMC met investor expectations by maintaining the Fed Funds Target Range (FFTR) at 5.25%–5.50%, and U.S. inflation, as indicated by the Consumer Price Index (CPI), was lower than anticipated.
Other positive indicators, such as the slightly higher Real Gross Domestic Product (RGDP) print at 1.4% and the Personal Consumption Expenditures (PCE) report, have boosted market sentiment. These factors have increased the chances of at least two interest rate cuts by the central bank later this year, potentially in September and December.
Seller Exhaustion in the Crypto Market
Examining the crypto bull market across various timeframes reveals increased volatility to the upside, with corrections and consolidations along the way due to supply and demand dynamics. A decline in the average size of the top 10 USDT transactions leaving exchanges indicates decreased selling pressure and suggests investors are more inclined to hold their assets.
Technical Rebound in the Crypto Market
Technically, the recent gains in the crypto market are part of a rebound starting at major support levels and breaking out from a descending channel. The market may rise towards higher levels but needs to overcome certain resistance zones first. The current surge in the cryptocurrency market can be attributed to macroeconomic factors, reduced selling pressure, and a positive technical setup, fostering a favorable sentiment among investors.