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 examines the reasons behind the current crypto rally.
Crypto Market Rally Boosted by Fed Rate Cut Odds
One of the main reasons the crypto market is rallying is that the odds of the Federal Reserve cutting interest rates are rising following 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 jobs in August.
Therefore, there are signs that the labor market is not performing well, and the situation is likely to worsen. Donald Trump has threatened to fire thousands of workers during the government shutdown, which will exacerbate the situation.
Therefore, the weak job numbers mean that the Fed will likely maintain its dovish tone this month. The cryptocurrency market typically performs 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
Another important reason the crypto market is performing 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, such as XRP and Solana, already meet the criteria. As such, these approvals are likely to lead to increased 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 with other crypto funds, such as Dogecoin, Solana, and XRP.
Uptober Rally and Seasonality
Meanwhile, the crypto market is performing well due to seasonality, as the Uptober rally occurs. Historical data show that October is usually the best month for Bitcoin, as it has jumped in all years except for two.
The benefit is that this October has coincided with the potential for a rate cut and ETF approvals. It has also happened as Bitcoin has had strong technicals, including a bullish flag pattern.
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