Tom Lee, the founder of FundStrat and the Chairman of BitMine, has predicted a strong crypto rally happening this year. This prediction came even as the Bitcoin price remains in a correction and the top altcoins are in a bear market. This article examines potential catalysts for a crypto bull run.
Federal Reserve to Support Crypto Rally
One of the main catalysts driving the crypto rally is the Federal Reserve, which may be comfortable cutting interest rates this year.
Odds of a Fed cut jumped after the US published inflation numbers that missed analysts’ estimates. The headline Consumer Price Index rose slightly from 2.9% in August to 3% in September, lower than the median estimate of 3.1%.
Most importantly, core inflation, which excludes the volatile food and energy products, dropped from 3.1% to 3.0%. These numbers also dropped slightly monthly.
Therefore, these numbers prompted traders to predict that the Federal Reserve will cut rates again at the upcoming meeting. Such a 0.25% cut will bring the benchmark rate between 3.75% and 4%. Crypto prices rise when the Fed cuts interest rates.
Government Shutdown and Altcoin ETFs Approval
Another key reason a crypto bull run may occur is that the government shutdown will ultimately end before the year ends. This will be important, as it raises the possibility that the agency will start approving the filed altcoin ETFs. Some of the most notable altcoin ETFs are Solana (SOL) and Ripple (XRP).
Altcoin ETF approvals will be bullish due to general sentiment and potential inflows. Existing Bitcoin, Ethereum, Solana, and XRP ETFs have had substantial inflows this year.
READ MORE: Bitcoin Price Prediction Ahead of US Inflation Data: Buy or Sell?
Donald Trump and Xi Jinping Meeting
The other key catalyst that may trigger a crypto rally is next week’s meeting between Donald Trump and Xi Jinping. This meeting aims to resolve the ongoing trade war between the two countries.
China has threatened to cut exports of rare earth materials, impose reciprocal tariffs if Trump hikes them, and investigate American companies. Most analysts believe China has already won this trade war because of its dominant market share in rare earths.
Trump has threatened to boost tariffs to 130% and block software sales to China. Therefore, next week’s meeting could help resolve the crisis, boosting asset values.
Rising Institutional Demand for Crypto
Meanwhile, the XRP price may benefit from the ongoing rise in institutional demand for cryptocurrencies. A good example of this is the surge in inflows into Bitcoin and Ethereum ETFs this year. Bitcoin funds have attracted over $61 billion in inflows, while Ethereum funds are nearing $15 billion.
More institutions are also interested in cryptocurrencies. For example, JPMorgan said that it will accept Bitcoin and Ethereum as collateral. This is notable since Jamie Dimon was once highly critical of the industry. Other top companies, like Schwab and Vanguard, have begun to embrace the industry.
READ MORE: Top 3 Reasons Why Ethereum Price Could Go Parabolic Soon
