Crypto surges on improving sentiment
Major cryptocurrencies were seeing strong performances this week. While they remain below this year’s peak, they were able to rebound in a significant manner, recording successive gains after sliding during the first half of the month. The market reacted to the rapidly changing economic conditions and could continue to see significant volatility in the coming days and potentially price corrections if traders move to secure their gains.
Traders reacted positively to the possibility of seeing a Bitcoin ETF come to market. The initiative could reinforce the sentiment of increasing interest from large and institutional investors for bitcoin and cryptocurrencies in general. This comes in particular after the market was seeing pressures lately and deteriorating sentiment after the SEC moved forward with its legal fight against companies in the industry.
A successful launch of a bitcoin ETF could open the way for more inflows from individuals and professional investors alike. The investment vehicle could lower the barrier of entry into the market and attract significant volumes of investment into bitcoin in particular.
In this regard, bitcoin’s market dominance continued to increase against other cryptocurrencies, surpassing 50% of the total market value. The cryptocurrency could also continue benefiting from its status as a quasi-commodity when most other digital assets are considered securities by regulators. As a result, Bitcoin could emerge as a winner from the SEC’s legal efforts.
The direction of the Federal Reserve’s monetary policy could become less of a burden for bitcoin and the crypto market as a whole to a certain extent with traders looking at a potentially slower pace in interest rate hikes as the Federal approaches its peak rate. In this regard, Jerome Powell mentioned during his testimony in front of Congress the necessity to slow down the pace of monetary policy tightening, which could fuel risk appetite to a certain extent. However, monetary policy could remain a source of risk for the asset class.
