After an abysmal performance, the crypto market has finally gained momentum today, as the flagship crypto, Bitcoin, has started to head northwards.
Since August 15, Bitcoin has been consolidating between a range of $20,000 and $25,211. On September 7, BTC further nosedived to $19,427, creating havoc in the crypto space.
However, since the early trading hours, the Bitcoin price has gained momentum. Major altcoins are also tapping positive gains. Ethereum is up by 7% in the last 24 hours and is trading at $1,616. While BNB, XRP, ADA, and SOL are up by 5%-6%.
BTC Taps $19K
At the time of writing, the top coin is changing hands at $19,227, over a nearly 2% increase in the last 24 hours, with a market cap of $403B. As per the daily chart analysis, the RSI hints at a bullish divergence. It has bounced before reaching oversold territory. Such readings often indicate big future price rallies.
- Advertisement -
The current resistance level stands at $21,100. This 0.382 Fib retracement resistance level coincides with the support line of the previous channel.
However, the Bitcoin-adjusted SOPR chart (Spent Output Profit Ratio) indicates that market participants are cashing out rallies to find a better entry position. There is extreme Fear in the broader markets due to inflationary worries and the Federal Reserve’s (Fed) aggressive stance.
Why Is Crypto Market Bouncing Back
After the hawkish FED stance, crypto prices struggled to make positive gains. However, it now seems that the general market has stabilized well as S&P 500 has surged by 1.8% while NASDAQ 100 by 2.1%.
During the Pandemic, the crypto market increased tremendously alongside the traditional markets. Many experts claim that Bitcoin and other cryptocurrencies behave like tech stocks. If we consider this, the crypto rally is because the NASDAQ 100 has risen in value.
- Advertisement -
How Inflation Affects Bitcoin
Historically, inflation has affected Bitcoin prices significantly. As mentioned above, the Crypto market strongly correlates with the general market and depends on macroeconomic factors.
In addition, the Federal Reserve controls inflation levels in the US by interest rate hikes and quantitative tightening. These interest rates have a negative impact on the stock and crypto market.
A higher-than-usual interest rate spike in June caused a major collapse of the crypto market. However, the Bitcoin price jumped when the inflation slightly cooled off.
How Long Can This Bitcoin Rally Sustain
This ongoing crypto rally depends on multiple factors. For instance, many experts believe that the Ethereum Merge will be a highly bullish event for the crypto space.
- Advertisement -
The Consumer Price Index data scheduled to be released on September 13 will define the Federal Reserve’s stance on tackling inflation, which is again expected to affect the crypto prices majorly.
