A cautious crypto rally is underway today, with Bitcoin rising above $90,000 and the market capitalization of all tokens reaching $3.04 trillion.
The Sandbox (SAND) was one of the best-performing cryptocurrencies, jumping by over 15%. Canton (CC) token rose by 11%, while MYX Finance, Immutable, and Pump.fun rose by over 7%. The other top gainers in the crypto market included Axie Infinity, Render, and Stacks.
Crypto Rally Triggered by Dip Buying
Crypto prices rallied on Thursday as investors bought the recent dip that pushed Bitcoin from the year-to-date high of $98,000 to $87,000. It is common for cryptocurrencies to rebound briefly after experiencing a sharp decline.
The rally took place after Donald Trump delivered his speech at the World Economic Forum in Davos. In a key statement, he maintained his view that he will make the US the crypto capital of the world by implementing supportive policies. He cited the GENIUS Act, which regulated stablecoins, and the SEC’s deregulation efforts.
However, the Senate Banking Committee decided to delay the CLARITY Act by at least 2 weeks after Coinbase pushed back against the sweeping bill over its stablecoin rewards provisions.
Coinbase is worried that the bill makes it impossible for cryptocurrency exchanges in the United States to offer rewards. Banks and credit unions have warned that allowing these rewards would push customers to move their funds to exchanges.
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Donald Trump Ends His Tariff Threat
The crypto market rally also happened because of the “Trump Always Chickens Out” (TACO) trade, after he walked back his push for the US to acquire Greenland following a meeting with the head of NATO. He also removed the tariff threat to a number of NATO member countries. Instead, the US will have mineral rights in Greenland.
The announcement helped to push global stock prices higher. In Japan, the Nikkei 225 Index jumped by over 2.15%, while European indices such as the DAX 40, CAC 40, and FTSE 100 also rose. US indices like the S&P 500 and the Nasdaq 100 also jumped.
The crypto rally also coincided with a rebound in Japanese bonds after the government pledged to ensure stability. Japan’s 10-year yield dropped for the second consecutive day to 2.24%, while the 40-year yield fell to 4% from the year-to-date high of 4.21%.
Japanese bond yields climbed to a multi-decade high this week as investors predicted the Bank of Japan would deliver several rate hikes this year amid rising inflation and a slumping yen. A highly hawkish BoI is often seen as a bearish sign as it would push Japanese investors to sell risky assets and invest in local bonds.
The ongoing crypto rally could be a dead-cat bounce, a situation in which an asset in freefall rebounds briefly before resuming its downtrend. These bull traps have been common in the past few months.
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