As Bitcoin and the stock markets approach important levels, new trends in the cryptocurrency market are starting to appear. These trends are pushing crypto prices higher and will ultimately shape the future of the markets. It has been a week of highs and lows for Bitcoin investors, as the cryptocurrency has both excited and let them down.
Earlier today, Bitcoin made a strong bullish move as the total market capitalization of the cryptocurrency industry surpassed $1 trillion for the first time since October 5, 2022. Furthermore, Michael van de Poppe, the founder, and CEO of Eight predicts that Bitcoin will reach $30K as early as November. It means that cryptocurrency prices are rising.
3 Reasons Why Crypto Prices are Pumping Right Now
The current surge in cryptocurrency prices can be attributed to three factors.
An Uptrend in US Stocks
On October 26, stock indexes in the United States rose, extending a market rally that had already sent the Dow Jones Industrial Average to a six-week high. US Treasury rates fell as a result of dismal consumer confidence data and rising concerns about the cost of living, allowing US stocks to rise for the third day in a row.
S&P500 Price Chart – Source: Tradingview
The Nasdaq Composite rose 246 points, or 2.3%, to $11,199, while the S&P 500 rose 61 points, or 1.6%, to $3,859. The Dow industrials gained 337 points, or 1.1%, to $31,836.
Bitcoin nears $21,000 as traders expect less aggressive moves from the Fed https://t.co/RpG4K7wlgQ
— Bloomberg Markets (@markets) October 26, 2022
The report was the most recent to indicate that the US economy was slowing. After a string of aggressively raising interest rates to combat inflation, markets are now welcoming the possibility of a Federal Reserve policy easing. Furthermore, the rise in stock prices is fueling the rise in cryptocurrency values. Because these two asset classes are inextricably linked.
Bitcoin Price Raises amid Weaker US Dollar
The value of a cryptocurrency coin is inversely related to the value of the US dollar. It implies that a drop in the value of the dollar will result in high crypto prices. The dollar fell to a three-week low against its rivals on October 26. The dollar index, which compares the US currency to six others, including the yen, euro, and pound, remained nearly unchanged at 111.01, not far from its session low of 110.75, the lowest level since October 5.
Dollar Index Price Chart – Source: Tradingview
The decline in the value of the dollar is assisting cryptocurrencies is rising in value. This strong rise in cryptocurrencies, fueled by today’s mini-collapse of the US dollar (USD) index, has some believing that the crypto has reached the bottom and is now poised to rise.
On Monday, CNBC’s Jim Cramer predicted that the rising value of the dollar might soon reach its high point.
“The strong dollar has become an albatross around the neck of an already beaten-down market, but now the charts, at last, as interpreted by Carley Garner, suggest the dollar could be peaking.”
Fed Rate Hike Slowdown Hopes Rekindled
The US Federal Reserve will raise interest rates by 75 basis points for the fourth time on November 2, according to Wall Street Journal sources. However, Federal Reserve officials will likely consider whether and how to announce their intention to approve a lower rate hike in December. Christopher Waller, Governor of the Federal Reserve, stated that the Board of Governors would have “a deliberate conversation about the pace of tightening at our next meeting.”
markets rebound on Wall Street Journal report that Fed rate hikes could begin to ease in Decemberhttps://t.co/X5A3muhVHZ
— Chris Marcus (@ArcadiaEconomic) October 21, 2022
Some policymakers would like to avoid raising interest rates at the start of next year. Other representatives, however, argue that rate increases are necessary for the economy. The cryptocurrency market is expected to be impacted by an increase in interest rates. The Fed’s most recent interest rate hikes coincided with a drop in cryptocurrency values. As a result, the expectation that the Fed will lower interest rates caused a surge in cryptocurrency prices.
The article’s positive market impact is indicated by Bitcoin’s comeback, which prompts the safe-haven US dollar to surrender some of its intraday gains. We may see a recovery in the cryptocurrency market.
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