Possible Reasons Why The Crypto Market Is Bullish Today

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The end of last year ended with questions like will the crypto market skyrocket, fall, or tease investors? Will Bitcoin remain volatile? how will regulation play a greater role? What type of cryptocurrency will shine in the market this year? There were many predictions as analysts charted the future of cryptocurrency.

The beginning of this year proved positive in favor of the crypto market, as the prices of major cryptocurrencies rose. For now, the cryptocurrency market is bullish, indicating that market participants expect inflation to eventually cool down after favorable economic data.

Technically, the crypto market is still relatively down from its all-time highs, as the price of Ether appeared quite positive rallying to an almost 3-week high at $1,253 in January.

Like the low volatility recorded for Bitcoin, some experts believe that prices are on the verge of a comeback, but the BTC range-bound price could possibly give altcoins a boost.

3 major factors influencing the crypto market

Last year, high inflation was a major issue and the most recent ISM data could provide the Federal Reserve system with plenty of reason to lower interest rate hikes. Assuming inflation will stabilize, which is sort of suggested by the ISM data. Therefore, smaller increases in the following months are only expected if inflation declines.

Second, where Bitcoin and altcoins still have risk events that can impact the price, BTC futures indicate traders are moving from a real majority short to long. Additionally, 78.99% of investors and traders are long Bitcoin with a ratio of 3.76 to short BTC.

Now that the market is mostly long, BTC volatility will remain low. Given the reduction in spot volume, BTC volatility surprisingly hit a 2.5-year low in early January, which actually indicates an upcoming price movement.

If BTC volatility remains low, traders will have some confidence in Altcoins due to Bitcoin price consolidation. In other words, range-bound trading has now laid the foundation for market-wide altcoin rallies. Now that Bitcoin price has been impacted by the continued stream of negative news, today’s rally depicts a flash of bullish momentum.

Now that the US dollar index has started to show signs of cooling. Recently, the US Dollar Index (DXY) hit its highest level since 2002. Given the perfect world, investors should experience a DXY pullback to increase sentiment towards risky assets like cryptocurrencies.

The emergence of Defi & ETFs illustrating crypto prediction

Decentralized finance and decentralized autonomous organizations are seen as emerging cryptocurrency developments that appear to be the highest growth areas for crypto. Defi aims to recreate traditional financial products without any intermediaries, while DAOs are likely to be seen as a new internet community. Defi services surpassed $200 billion in 2021 and 2022 demand is expected to increase further in 2023.

Another aspect that could impact the crypto market is the prediction that the first Bitcoin exchange-traded fund (ETF) in the United States is expected to be approved this year. This will allow investors to have direct exposure to the cryptocurrency itself. As the market is now huge and mature enough to support it, experts predict that a Bitcoin Spot ETF will be approved.

Conclusion

As a general rule, the crypto markets will likely continue to witness price swings and most crypto experts agree that there will be many volatile days ahead. Where positive news of easing inflation points to near-term increases in crypto prices, but market reaction to the upcoming unemployment data and CPI report will be the most realistic approach for predict the direction the market chooses to take.

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