A cautious crypto market rally is happening today, January 28, as traders await the Federal Reserve’s upcoming interest rate decision. Bitcoin rose to $90,000, while Ethereum crossed $3,000.
The top gainers in the crypto industry included Pippin, Hyperliquid, Pump, Lighter, Quant, and Jupiter. All these tokens were up by over 10% in the last 24 hours. The market capitalization of all tokens jumped to over $3 trillion.
One potential reason for the crypto rally is the ongoing US dollar sell-off. Data shows that the US Dollar Index (DXY) tumbled to $96, its lowest level in over four years. The greenback has crashed against most currencies, including the sterling, euro, and the Australian dollar.
The currency has plunged amid rising odds of a US government shutdown, which will take effect on Monday next week. These odds have jumped to over 80% today from 70% on Monday. Risky assets like cryptocurrencies and American stocks often do well when the US dollar is falling.
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The crypto market is going up because of the ongoing surge in metals and stocks. Gold rose to over $5,200, while the silver price remained above the key support level at $100.
At the same time, top indices like the S&P 500 and the Dow Jones are trading near their all-time high ahead of the Magnificent 7 earnings. Therefore, the crypto market is riding on investor anticipation of further gains in line with these assets.
However, as we have seen before, the main risk is that the ongoing crypto rally could be a dead-cat bounce or a bull trap. A DCB is a situation in which a falling asset rebounds briefly before resuming its downtrend.
The possibility that this rebound is a dead-cat bounce is high, given the bearish flag patterns forming on Bitcoin and Ethereum. This pattern consists of a large drop and a channel, which often leads to further downside.
In his recent Bitcoin price prediction, Michael Novogratz, the founder and CEO of Galaxy Digital, said that a complete Bitcoin price recovery will be confirmed when it moves above the $100,000 and $103,000 mark.
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