Cryptocurrencies extend their good moment. The bitcoin (BTC) is approaching $64,000 while Ethereum (ETH) is trying to consolidate $3,400 after touching $3,500 in the last 24 hours.
Among altcoins, the most notable increases belong to Litecoin over 8%, Near Protocol (8%), Avalanche (6.4%), and Shiba Inu (6.3%)The improvement in prices is due to three key factors.
Cryptocurrencies: What factors drive the market?
1. The assassination of the former US president
This fact has considerably increased the probability that the Republican candidate will win the presidential elections in November.
The explanation for this positive reaction is simple: Trump is very pro-digital assets. In fact, the Republican has just named Ohio senator JD Vance as his vice presidential candidate. Best known for being the author of ‘Hillbilly Elegy’, ‘Politico’ reports that Vance has reportedly drafted a bill that would revamp the way the US regulates digital assets, which, according to its sources, would be more favourable to cryptocurrencies than the bill that was passed by the House of Representatives in June.
Experts believe that the more lax regulatory policies, Tax cuts and other measures that could be expected from Trump would greatly benefit cryptocurrencies. Rania Gule, a market analyst at XS.com, noted that the market could “achieve gains similar to those seen after the debate” that favored the Republican candidate in June. “Therefore, I think that US political news is driving the gains of cryptocurrencies because it is a speculation-driven area,” she said.
Ramiro Garciaanalyst of Bitgetargues that the effect produced by the massive sale of bitcoins by the German government a few weeks ago, is undoubtedlyIt was clearly bearish and led to a collection of the price of “digital gold” towards testing support at 56k.
“Let’s remember that last January Germany had seized about 50k BTC from operations linked to illegal activities and was prepared to carry out massive sales that were tracked on a website,” recalls the analyst. This “FUD”, added to the news of MTGox returning bitcoins to its holders, were obvious reasons for a market struggle to bring the price below its range, which has been maintained for months between 72k and 56k in daily candles, he adds.
“The confirmation that the range still has support at $56,000 has been a clear signal to investors that the next path is to test $65,000 and, why not, again its resistance at $72,000 if there are no new “black swans” in the markets,” García analyzes.
Of course, the market needed clear signals to get back on the green path: The German government has already sold all its BTC and the failed assassination attempt on a pro-bitcoin presidential candidate was certainly a bullish signal. “Technically, we can continue to expect the price to remain in the price range described above or break above 72k and see a new ATH during July,” he says.
2. ETFs are in a good moment
On the other hand, the market is reacting positively to the increase in fcapital inflow luxuries into listed funds (BTC Spot ETFs. Since July 5, these investment products have attracted nearly $1.5 billion in net inflows (over $16 billion since their inception) and right now They manage more than $51 billion worth of bitcoin, around 4.5% of the total supply of the cryptoasset.
“Despite strong net inflows, trading volumes remain below average, totaling $6.9 billion weekly and nearly $1.4 billion daily. This volume, while below average since inception, has increased compared to recent weeks and is relatively high for July, a historically low trading period for both traditional finance and digital assets,” explained Matteo Greco, Research Analyst at Fineqia.
On the other hand, some experts point out that ETH Spot ETFs could be approved in the coming days. Bloomberg ETF analyst Eric Balchunas says the Securities and Exchange Commission has told companies that have applied to create these ETFs to submit their S-1 applications – the document that needs to be approved in order to go public – by Wednesday. If approved, Balchunas says, they could go public as early as next week.
3. Good economic data from the US
Likewise, the Crypto assets are also benefiting from macroeconomic data that have been known in the United States. The latest CPI reading showed a more than welcome reduction in inflation which, added to the latest labor market data, has triggered expectations that the Federal Reserve (Fed) carry out the first interest rate cut in September. It should be recalled that the US central bank has reduced its forecast for rate cuts in 2024 from three to just one in recent months, and towards the end of the year.
In this sense, Jerome Powell, Fed Chairman said Monday that the agency will likely will execute the pivot of its monetary policy before US inflation reaches the 2% target. According to Powell, waiting until the CPI reaches that level “would probably be waiting too long, because the tightening that you’re doing, or the level of tightening that you have, still has effects that will probably bring inflation below 2%.” Despite not giving an exact date for when the Fed will begin to ease interest rates, Powell did admit that his confidence has improved after the latest data.
Source: Ambito
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