A renewed optimism in the crypto market

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The crypto market is starting the fall season quite positively. Although far from a dizzying rally, indicators and price dynamics are generally bullish. The total crypto market capitalization is gradually increasing above $ 2 trillion, which is not far from historic highs. An even more positive sign is the decline in Bitcoin’s dominance index, which has already fallen to 41.9%. This directly indicates the existence of widespread demand for altcoins. The capitalization of the first cryptocurrency has reached $ 934 billion, approaching the most important psychological threshold of $ 1,000 billion.

Particularly noteworthy is Ethereum (ETH), which topped $ 3,700 and is not stopping its bullish movement. There are several important reasons for this growth, including the decline in ETH coin stocks on cryptocurrency exchanges. According to analysis firm CryptoQuant, the volume of coins on cryptocurrency wallets has fallen by 700,000 ETH in less than half a month.

As in the traditional economy, lower supply stimulates price growth and sometimes even increases demand for a limited product. Plus, there’s a lot of support for the play going on around the NFT. The CryptoPunks project is reaching Hollywood level, and that can only drive demand for these tokens. It should be noted that NFTs run on the Ethereum blockchain and every transaction within the ecosystem is subject to fees. Blocking coins in DeFi protocols also affects the drop in coin supply.

The news that the European Commission is trying to introduce cryptocurrency regulations in the EU, linked among other things to circulation rules in the bloc’s member states, can be viewed with some anxiety. The initiative is met with rather fierce opposition from citizens of various countries, who prefer regulation at the level of each country.

Beijing wants to create an international mobile payments network using the digital yuan. China’s economic machine demands that the currency internationalize. The country now has the power to create a truly competitive digital currency, but Western countries’ protectionism and direct opposition to the digital yuan could hamper those plans.

Going forward, the global digital economy will likely revolve around several major centers of gravity, one of which will be China, absorbing all of Asia, while the second center will be in Washington, which will dictate the rules to the West. There won’t be a predetermined winner, but we can guess who will be among the losers – the early cryptocurrencies, who can await the fate of Yahoo and other once big but lost power projects.

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