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Crypto

Why is the crypto market up today?

By John Paterson
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The cryptocurrency market is up today, with the total market capitalization rising by approximately 3.2% in the last 24 hours to reach $2.8 trillion on March 20. The gains were led by Bitcoin (BTC) and Ether (ETH), which have risen around 3% and 4%, respectively.

Crypto market performance Jan. 30. Source: Coin360

Let’s look at the top catalysts driving the crypto market rebound today.

Risk-on sentiment pushed the crypto market up

The crypto market rebound mirrors gains in US equities following the Fed’s decision to leave interest rates unchanged.

  • The S&P 500 and the Nasdaq rose by 1.08% and 1.4%, during the late New York trading session on March 19. 

  • Crypto-related stocks also climbed higher, with crypto exchange Coinbase (COIN) rising by 4.75% and Strategy (MSTR) gaining nearly 7.4%.

  • The US Dollar Index (DXY) remains at its lowest levels since early November and is down more than 6.04% from its Jan. 13 peak of 110.17. 

  • This comes after the Federal Open Market Committee (FOMC) meeting, which saw the US central bank leave interest rates unchanged at 4.25%-4.50%, meeting market expectations.

  • The committee now projects two rate cuts by the end of the year.

  • The latest data from CME Group’s FedWatch Tool sees 16% odds of a 0.25% cut in May with the odds increasing to 60.1% in June.

Fed target rate probabilities for June 18 FOMC meeting. Source: CME Group

  • With traders now pricing in a higher likelihood of rate cuts, risk assets, such as cryptocurrencies, have seen renewed interest from traders.

Pro-crypto policy expectations

Adding to the market’s upward momentum is speculation that the US government was preparing an update to its cryptocurrency policy.

Key takeaways:

  • There are speculations that Trump will make major updates to his administration’s crypto policies.

  • “This would be his first major update since March 6, when the national crypto reserve was established,” capital markets commentator The Kobeissi Letter said in a March 19 post on X, adding:

“Rumors state President Trump may be making a significant change to his strategy.”

  • Trump’s recent comments about establishing a Strategic Bitcoin Reserve and his pro-crypto stance have sparked excitement among investors. 

  • Following his election, Bitcoin ETF inflows hit a record $3.4 billion per week, and Bitcoin breached the $100,000 level before setting a new all-time high above $109,000. 

  • This reflects institutional enthusiasm for a potentially crypto-friendly regulatory environment.

  • Combined with the Fed’s dovish stance, this optimism has resulted in BTC price rebounding above $85,000.

According to  BitMEX co-founder Arthur Hayes, “QT is basically over on April 1,” highlighting that markets should now focus on potential SLR exemption or restart of QE. Hayes believes $77,000 was the likely bottom for Bitcoin.

Related: US recession would be a big catalyst for Bitcoin: BlackRock

Crypto market technical rebound

Chart technicals show that the crypto market’s gains today are part of a rebound that started after the price dropped to a multimonth low of $2.44 trillion on March 11.

TOTAL crypto market cap daily candle chart. Source: Cointelegraph/TradingView

The total market cap, currently at $2.77 trillion, seeks to break above the resistance zone between $2.8 trillion and $3 trillion, where both the 200-day and 50-day SMAs sit.

If this happens, it would signal a bullish breakout from the current downtrend, with bulls targeting all-time highs around $3.20 trillion, i.e., the 100-day SMA.

Meanwhile, the daily RSI has jumped from near oversold conditions at 31 on March 11 to the 47, suggesting the bullish momentum is picking up.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.