What’s Driving Today’s Rise in the Crypto Market?

The cryptocurrency market has experienced a rise today as bearish positions face significant liquidations while positive movements in the stock market enhance investor confidence.

The current performance of the cryptocurrency market is noteworthy, with a total market capitalization increasing by around 1% within the last 24 hours, bringing it to approximately $2.11 trillion. This increase is attributed to gains in major cryptocurrencies such as Bitcoin (BTC) and Ether (ETH), which saw rises of about 1.1% and 0.3%, respectively.

Major Factors Behind Today’s Uptick

Today’s rise in the crypto market is closely aligned with the recent performance of U.S. equities. Over the last 24 hours, the U.S. stock market has surged by 5%, with the S&P index recording its highest gains since November 2022.

Several factors contribute to this positive momentum in the cryptocurrency market today:

• The S&P 500 and Nasdaq reached five-day highs, as the S&P 500 saw an increase of over $1 trillion in market capitalization on August 8.
• Positive comments from the Bank of Japan have eased market concerns, suggesting a revival of the Yen carry trade.
• Recent data indicates a decrease in Initial Jobless Claims to 235,000, which came in lower than expectations, further boosting optimism.

However, investor sentiment remains cautious due to uncertainties surrounding the Federal Reserve’s monetary policy. The upcoming Federal Open Market Committee (FOMC) meeting, scheduled for September 18, has generated high expectations for the first interest rate cut since March 2020.

Spot Bitcoin ETFs Attracting Investors Again

The resurgence of inflows into U.S.-based spot Bitcoin ETFs has contributed to the ongoing positive sentiment in the market. As of August 9, these investment vehicles managed around $54.31 billion in Bitcoin, up from $48.43 billion just days prior.

Data indicates that after several consecutive days of outflows, spot Bitcoin ETFs saw net inflows of $45.1 million and $194.6 million on August 8 and August 9, respectively.

Additionally, Brazil’s Securities and Exchange Commission has approved the first spot Solana ETF, suggesting a growing trend in ETF adoption following earlier approvals for Bitcoin and Ethereum ETFs in various regions.

Liquidations Fueling the Market Rally

The positive shift in the crypto market aligns with a significant wave of short liquidations across derivatives markets. Recent data indicates that short sellers, betting against the market, faced $110.92 million in liquidations within the last 24 hours, whereas long traders experienced $76.81 million in liquidations during the same timeframe.

Liquidations of short positions force traders who expect price declines to sell, contributing to buying pressure that drives up market valuations. The impact is a notable factor in today’s upward movement in the cryptocurrency domain.

Investing in cryptocurrency involves risks, and it is essential for individuals to conduct thorough research before making financial decisions.