Why is crypto up today?

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As a seasoned crypto investor with a few years of experience under my belt, I’ve seen my fair share of market fluctuations. The current surge in crypto prices, with the market cap hovering around $2.57 trillion, is an intriguing development.

The total value of the cryptocurrency market currently stands at approximately $2.57 trillion, fluctuating between $2.17 trillion and $2.7 trillion since March. Numerous macroeconomic elements are influencing this trend. However, the reason behind the recent surge in crypto prices is multifaceted.

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Why are crypto prices rising?

As a researcher studying the cryptocurrency market, I’ve observed that the total value of the market has recently reached levels not witnessed since late last year. Currently, Bitcoin is trading at approximately $68,390, representing a 7% gain over the past week. This surge in price represents a significant jump from the lows experienced in 2022 following the FTX exchange collapse, which had a profoundly negative effect on the entire industry.

The surge in cryptocurrency prices could be attributed to the growing optimism stemming from recent approvals of new Exchange-Traded Funds (ETFs).

Ethereum ETF approvals may cause scarcity and increase demand

Over the past week, American regulatory bodies have given the green light to several Ethereum (ETH) Exchange-Traded Funds (ETFs). An Ethereum ETF represents a type of investment vehicle traded on stock markets with Ethereum as the underlying asset. Essentially, these ETFs enable traders to wager on Ethereum’s price fluctuations without having to directly own any.

As a researcher studying the impact of exchange-traded funds (ETFs) on the crypto market, I can’t help but be excited about this development for two key reasons. Initially, the influx of capital from investors purchasing ETF stocks could significantly boost the overall volume of money entering the cryptocurrency sector. Although these investors won’t directly own Ethereum (ETH) coins themselves, the ETFs they invest in are required to acquire substantial quantities of ETH as collateral for the funds. This increased demand for Ethereum may lead to higher prices and further growth within the crypto market.

As a crypto investor, I’m thrilled to share that today, the Securities and Exchange Commission (SEC) gave its approval to Grayscale Ethereum Trust’s (ETHE) Form 19b-4. I’m grateful for the chance to collaborate with regulators during their evaluation process for spot Ethereum Exchange-Traded Funds (ETFs).— Grayscale (@Grayscale) May 23, 2024

An Exchange-Traded Fund (ETF) can have the effect of reducing the availability of its underling asset by creating a supply shortage, potentially increasing its value due to scarcity. The Securities and Exchange Commission (SEC) has given the green light to not one, but eight such funds.

From my perspective as an analyst, only about a quarter (27%) of Ethereum’s total supply is currently being used for staking, while Solana and Cardano both have over two-thirds (63% for Solana and 65% for Cardano) of their supplies locked up in staking.

As an analyst, I would observe that if Ethereum staking reaches levels comparable to its competitors, the existing supply shock could intensify. Consequently, this situation might trigger a bullish trend for Ether (ETH), driving up its price.

Noteworthy is the observation that Bitcoin’s price dipped approximately 4% on May 28. In contrast, Ethereum experienced a 4% price surge and has gained 17% in the past month and an impressive 113% over the last year. The cryptocurrency market is abuzz with investor interest as they keep a keen eye on these developments in Ethereum.

The current level of open interest for Ethereum futures contracts on established trading platforms has reached an all-time high, while investments in Bitcoin ETFs have seen a rise during this week. This trend suggests a generally optimistic outlook among traders and investors.

Interest rates and the Halving

As a Bitcoin market analyst, I’ve observed that the Bitcoin supply experienced a significant reduction by half during April. Historically, this event has been followed by price increases for Bitcoin. However, it is important to consider potential opposing factors that could influence investor behavior. One such factor includes the current high-interest rates, which stand at 5.25% – 5.5%, marking the highest in the last 23 years. These rates might have caused investors to hold back on their Bitcoin investments.

With higher returns coming from more conventional investments such as bonds, the allure of riskier options like Bitcoin may diminish.

The Federal Reserve has signaled that interest rates will probably stay unchanged throughout the summer. Yet, there are still six opportunities for the Fed to lower rates by year-end. This growing expectation could be influencing financial markets, potentially driving up cryptocurrency prices.

Upcoming data from the Consumer Price Index (CPI), set for release on June 12, could influence the Federal Reserve’s upcoming decision, making it an important consideration in current market movements.

Today’s top gainers: coins on the move

In the cryptocurrency market, Notcoin (NOT) has experienced a 26% growth in the past 24 hours, joined by Celestia (TIA), which has risen by 15%, and Chiliz (CHZ) with an increase of 11%. This week, NOT stands out with a remarkable surge of 68%. Furthermore, FLOKI has seen a weekly growth of 33% and ONDO has recorded a 30% increase.

With the ongoing development of the larger economic landscape, it is anticipated that cryptocurrency markets will experience increased price fluctuations.

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2024-05-29 10:30