A crypto market rally is underway, with Bitcoin and most altcoins soaring sharply higher. Bitcoin approached its all-time high, while the market capitalization of all coins jumped to over $4.1 trillion. This article explores why the crypto rally is happening.
Crypto Market Rally Boosted by Fed Rate Cut Odds
One of the main reasons why the crypto market rally is happening is that the odds that the Federal Reserve will cut interest rates are rising after the recent jobs numbers.
A report by ADP showed that the economy is not doing well, as the private sector lost over 36,000 jobs in September. A previously released report by the Bureau of Labor Statistics (BLS) showed that the economy added just 22,000 in August.
Therefore, there are signs that the labor market is not doing well, and the situation will likely get worse. Donald Trump has threatened to fire thousands of workers during the government shutdown, which will exacerbate the situation.
Therefore, the weak jobs numbers mean that the Fed will likely maintain their dovish tone this month. The crypto market normally does well when the Fed is cutting interest rates.
Bitcoin Safe Haven Status as Government Shutdown Continues
The crypto market rally is happening as investors turn to Bitcoin, which has now become a safe-haven asset. Bitcoin’s performance has also mirrored that of gold, which recently jumped to a record high.
One of the main risks affecting the markets is the ongoing government shutdown, which may extend for weeks. Republicans want a clean spending package, while Democrats have insisted on attaching healthcare issues to the package.
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Crypto ETF Approvals
The other important reason why the crypto market is doing well is that investors are anticipating ETF approvals by the Securities and Exchange Commission (SEC) as soon as the government reopens.
The agency’s generic listing guidelines mean that this will happen, as some top coins like XRP and Solana already meet the criteria. As such, these approvals will likely lead to more demand from American investors.
Recent data shows that these investors have moved to the already-existing crypto ETFs. Bitcoin ETFs have just crossed the $60 billion inflow level, while Ethereum funds are nearing the $15 billion level. The same is happening among other crypto funds like Dogecoin, Solana, and XRP.
Uptober Rally and Seasonality
Meanwhile, the crypto market is doing well because of seasonality as the Uptober rally happens. Historical data shows that October is usually the best month for Bitcoin, as it has jumped in all years apart from two.
The benefit is that this October has coincided with the potential for rate cut and ETF approvals. It has also happened as Bitcoin has had strong technicals, including a bullish flag pattern.
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