The crypto market rally continued for the second consecutive day as investors embraced a risk-on sentiment amid hopes of Federal Reserve interest rate cuts. Bitcoin price retested the important resistance at $89,000, while the market capitalization rose to $3.02 trillion.
Crypto Market Rally Happens as Open Interest Rises
One of the top reasons why the crypto market rally is happening is that futures open interest rose modestly. Data compiled by CoinGlass shows that the open interest rose by 2.9% in the last 24 hours to over $129 billion.
Rising interest is a bullish aspect because it is a sign of higher liquidity and demand among investors. Bitcoin’s open interest rose to $60 billion from the weekend low of $58 billion. Ethereum’s interest soared to $36 billion, while Solana’s figure stood at over $7 billion.
Still, the open interest remains much lower than last month’s high of over $250 billion. In a CNBC interview on Monday, Anthony Pompliano, a top crypto expert, argued that the drop in open interest was a good thing for the industry as it has brought it to normal levels.
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Federal Reserve Interest Rate Cut Odds Jump
The crypto market rally is happening as odds that the Federal Reserve will cut interest rates in December rose. A Polymarket poll with over $160 million in assets boosted the odds of a cut rose to 83%. Another poll brought the odds of three cuts this year to 83%.
These odds jumped after multiple statements from Fed officials like Christopher Waller, Mary Daly, and John Williams. These officials have pointed to the labor market, which has remained under pressure in the past few months.
US Stock Market Rally
The crypto market rally is also happening because of the ongoing happenings in the stock market. The main benchmark indices like Nasdaq 100, S&P 500, and Nasdaq 100 indices soared by over 1% on Monday.
Top technology companies like Micron, Broadcom, AMD, and Sandisk were among the top gainers on Monday. The same trend happened in other indices like the Hang Seng, KOSPI, and the Nifty 50. It is common for the crypto market to do well when stocks are rising.
Other Reasons for the Crypto Bull Run
The ongoing crypto market rally is happening because of the falling Crypto Fear and Greed Index. It is common for Bitcoin and most altcoins to rally when the index is in a strong freefall.
The market rally also happened as investors embraced the newly launched XRP ETFs. Data shows that these funds attracted over $164 million in inflows on their first day. That is a sign that there is demand for altcoin ETFs.
Meanwhile, Upbit, the biggest crypto exchange in South Korea, is also going public in New York, joining other companies like Coinbase, Bullish, and Gemini.
There are chances that the recent crypto market crash is now over. However, there is also a risk that the ongoing rally is part of a dead-cat bounce or a bull trap.
READ MORE: When Will Crypto Go Back Up?
