A crypto market rally is underway, with Bitcoin rising above the important resistance level at $115,000 and Ethereum surging past $4,500.
The top gainers in the crypto market were coins like Ondo Finance (ONDO), Aerodrome Finance (AERO), Pendle (PENDLE), and Dogecoin (DOGE).
Why the Crypto Market Rally is Happening
The first main reason why the crypto market rally is happening is that investors are now buying these coins ahead of the upcoming Federal Reserve interest rate cuts, which are set to start on Wednesday next week.
Most analysts expect the bank to cut rates by 0.25%, while others anticipate a 0.50% reduction due to ongoing labor market weakness.
READ MORE: How Will Fed Interest Rate Cuts Affect Circle Stock Price?
Interest rate cuts normally fuel a risk-on sentiment among investors, which also explains why the stock market is in a strong rally this week, with the Nasdaq 100 and the S&P 500 Index rising to their all-time highs.
Lower rates boost the crypto market by leading to a weaker dollar and by encouraging risk-taking among investors. A good example of this is what happened during the COVID pandemic when the Federal Reserve slashed interest rates to zero, triggering a major bull run.
Seasonality and Altcoin ETF Approvals
The other main catalyst for the ongoing crypto market rally is that analysts are expecting the Securities and Exchange Commission (SEC) to start approving altcoin ETFs in October this year.
Most altcoins, such as XRP, Solana, Hedera Hashgraph, and Litecoin, have ETF approvals scheduled for October, with the odds of approval now exceeding 80%. Therefore, it is normal for these coins to do well in anticipation of the approval.
Meanwhile, the rally is happening because of the upcoming fourth quarter, which is usually the most bullish one for the crypto market. The average return of Bitcoin in the fourth quarter since 2013 is 85%, while Ethereum has risen by an average of 25% in this period.
These tokens have also jumped for individual reasons. Ondo Finance has soared after the successful launch of its Ondo Markets product, which enables investors to trade tokenized stocks, and the fact that its total value locked has jumped to a record high of over $1.57 billion.
Similarly, Pendle, a network that enables users to trade yield products, has seen its TVL go parabolic, rising to a record high of $12.25 billion from the year-to-date low of $2.6 billion.
Dogecoin is soaring ahead of the upcoming launch of the Rex-Osprey DOGE ETF on Friday, while Aerodrome Finance has continued to see robust trading activity in its network.
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