There are signs of a crypto bull run as Bitcoin and top altcoins bounced back. Bitcoin price jumped to $115,000 for the first time in weeks. Zcash jumped by 27% in the last 24 hours to $364, while Pi Network and Dash jumped by 15% and 22%, respectively.
The market capitalization of all cryptocurrencies jumped by over 3.90% to over $3.89 trillion. Most notably, the 24-hour volume soared by over 64% to $138 billion.
Why the crypto bull run is happening
The ongoing crypto market rally coincided with the performance of the stock market. Asian indices like the Hang Seng and Nikkei 225 resumed their bull run. Similarly, futures tied to the Nasdaq 100, S&P 500, and Dow Jones were all in the green.
The crypto market rally happened after the conclusion of talks between the United States and China. This meeting seems to be successful as the two sides reached some agreements that will be signed by Donald Trump and Xi Jinping at the APEC meeting in South Korea on Thursday.
The deal, if it remains, will remove one of the biggest risks in the market. For example, Donald Trump’s threat of a 130% tariff on Chinese goods earlier this month led to a crypto market crash and liquidations worth over $20 billion.
The agreement will also help to contain inflation in the United States. While details are scarce, there is a likelihood that the current tariffs will be lowered.
Federal Reserve interest rate decision next
The crypto bull run is also happening as investors wait for Wednesday’s interest rate decision by the Federal Reserve.
Economists believe that the Federal Reserve will cut interest rates by 0.25%, bringing them between 3.75% and 4%. It will be the second consecutive meeting of rate cuts after the bank slashed in the last meeting in September.
The main reason for the cut is that the labor market has weakened in the past few months, with a report by ADP showing that the economy lost 36,000 jobs in September this year.
At the same time, there are hopes that inflation has largely been contained. A report by the Bureau of Labor Statistics (BLS) showed that the headline Consumer Price Index (CPI) rose to 3.0% in September, up slightly from the previous 2.9%. Core inflation, which excludes the volatile food and energy products, dropped slightly to 3.0%.
The cryptocurrency market does well when the Fed is either cutting interest rates or when it has embraced a dovish tone.
Tom Lee crypto prediction
The crypto bull run is also happening as some investors remain optimistic about the industry. In an interview with CNBC, Tom Lee, the founder of FundStrat and the chairman of BitMine, predicted that there will be an end-of-the-year rally in the crypto market.
He believes that the fundamentals of key coins, especially Bitcoin and Ethereum, are relatively solid. The supply of the two on exchanges has continued falling in the past few months, a sign that investors are not selling their coins.
At the same time, demand for these coins continued rising among institutional investors. For example, spot Bitcoin and Ethereum ETFs have attracted over $64 billion and $14 billion in assets, respectively, a trend that may continue in the coming weeks.
Still, there is a risk that the ongoing crypto bull run is a dead-cat bounce, which is a situation where assets in a freefall have a temporary rebound and then resume the downtrend. For example, there is a likelihood the crypto market will resume its retreat as investors sell the Fed and trade news.
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