Bitcoin and Crypto Benefit from Bullish Stock Market Sentiment

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Source: Pixabay

Crypto bulls are looking to extend the gains seen in the first half of the year with positive signals coming from the bond and equity markets.

The correlation between crypto and the stock market has led many observers to predict lower prices following macroeconomic factors that plagued the scene in 2022.

However, current realities contrast sharply with slowing inflation and the signal from the Fed indicating a pause in previous interest rate hikes.

Overall, both markets have hit highs this year as they recover from the turmoil of 2022. Market leader Bitcoin (BTC), which lost more than 55% of its value last year, gained 80% this year as institutional money pours in.

Despite a poor start to the year due to rising interest rates, tech stocks have been on a roll in recent weeks, with the tech-focused Nasdaq hitting a 52-week high on July 12.

Notably, the artificial intelligence (AI) craze fueled bullish sentiment in the stock market with seven stocks including Google, Amazon, Nvidia and Apple accounting for 55% of the NASDAQ 100 and 27% of the S&P 500.

Market analyst Lyn Alden explained that liquidity in the bond market will have a positive impact on crypto and other liquidity-focused assets.

“But some things started to change at the start of the fourth quarter of 2022. The US Treasury started to put cash back into the market and offset the Fed’s quantitative tightening, and the dollar index fell. The S&P 500 “bottomed out and started to level off. Liquidity in sovereign bond markets started to decline. Various liquidity-focused assets like bitcoin rallied.”

Interest rates take a break to propel a bull run

Bulls have been in a frenzy since the Fed suspended interest rate hikes after previous consecutive increases in recent months.

The price of Bitcoin has also gained momentum on the back of increased liquidity as well as renewed institutional interest in the asset. Interest rate hikes slow market growth as investors tend to shift funds away from higher-risk assets.

With the US market on the eve of a spot Bitcoin Exchange Traded Fund (ETF), coupled with the upcoming BTC halving, experts predicted an upward trend in Bitcoin price.

Along with favorable interest rates and the equity market, recent events like Ripple’s (XRP) partial victory against the Securities and Exchange Commission (SEC) have propelled bullish sentiment.

XRP price maintained a rise of more than 58.92% for seven days, while other altcoins like Cardano (ADA), Solana (SOL) and Dogecoin (DOGE) recorded 6.17%, 16, 63% and 6.40%.

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