Macroeconomic Factors are Enforcing the Crypto MarketsSeptember 10, 2022
There has been a strong rally in the crypto markets, especially bitcoin and its token price. During the last week, the BTC token managed to gain its biggest price hike in half a year. That brought about a broad rally in the digital currency domain which managed to push the market cap of the crypto space to a point of over 1 trillion USD. The sudden flash burst in the market managed to generate a lot of momentum, but at the same time, analysts believe that the crypto rally has not reached the steady ground just yet. That means that there is no baseline improvement in the cryptocurrency space that would foster a sudden and strong interest among investors.
Instead, the speculative space opened up and allowed for a big and very rapid increase first in the BTC investment space and then across the crypto markets, both big and small. But, others are pointing to a shifting global macroeconomic environment that has been more than hectic this year. These movements could explain what helped trigger the ongoing rally and what might turn into the ability of the crypto space to actually support a more prolonged rise in value and market capitalization.
One of the biggest rallies of 2022 began last Friday with the opening of the Asian markets. In the previous week or so, BTC fell close to its lowest point in two years. However, the start of the trading day in Asia turned that around completely. In a space of 24 hours, the market value of the biggest cryptocurrency rallied well over 10 percent. That placed the price of a BTC token at the 21,000 USD level and over it.
The rally began from a point where the BTC tokens dropped to the 18,500 USD price range. Now, market analysts are setting up goals for the bulls if the rally manages to hold firm. If the buying pressure continues, the range of 22,400 USD and 23,000 USD could be in sight for the bulls. Most importantly, the overall market cap is continuing to climb, showing a steady tendency to stay above 1 trillion USD.
For many in the crypto community, no matter if they are whale investors or esports players who are basically investing because of their enthusiasm, the move could be perceived as a bigger correction. That correction takes and re-estimates the notion of digital assets and it clearly assessed that the market was undervalued. Thus, the correction is pushing prices up and making that slowly wrap itself into wider buying traction.
But, this is not taking place in a vacuum. Instead, there are some additional macro factors that are playing a role in the same bullish sentiment. That is especially relevant because, in the previous period, the movement of the crypto markets has been more than synched with the movement of the traditional stock market. So, any big change in the crypto market is signaling that a similar sentiment is ongoing in the regular markets as well.
Like always, it is hard to define which factors played a big part in a substantial movement of a particular asset price. But, in the case of the recent bullish swing up, market experts are pointing out that multiple factors likely all played a part. The European Central Bank decided to set a hike on its interest rate. That was joined by the acquisition of big companies, which saw FTC Ventures purchase a 30 percent stake in SkyBridge Capital, owned by Anthony Scaramucci.
These all added confidence to the investors who were ready to purchase digital assets. In all likelihood, they were in the same mindset for weeks, but they just waited for the good moment to do just that. The start of September clearly offered the opportunity to do the same.
Ukrainian War News
Another macro factor that is apparently playing a role in the rally is the developments on the ground in the war between Ukraine and Russia. In recent days, a completely unexpected offensive by the Ukrainian army managed to liberate waste swathes of the country and push the Russian invading army back from places that it took over in the first weeks of the war. That is an apparent escalation of hostilities but also something that the markets are evaluating as a positive economic development. The same might sound strange and counterintuitive as many might think that more war is bad news for the global economy. However, the push might pressure the Russian government to a position of negotiation, similar to the Ukrainian enemies.
That could eventually put a stop to the same tragic war that has claimed many lives and also destabilized the global geopolitical situation more than any conflict since the end of WW1. But, there is little optimism that the same could take place in the near future or in a rapid manner. While the present Ukrainian offensive is going better than anyone could have predicted just a few weeks ago, the Russian army still has a massive potential that it could put into action over the coming days. But, throughout all of this, the potential for a change in status quo is apparently providing the markets, including crypto ones, with a sense that things can eventually get solved in the same region.
Possible Selloff in Near Future
The jump in the bitcoin price is a positive short-term development for sure. However, there is a strong sense that the selloff by early investors and quick traders is likely very close. That could be a big barrier waiting just below the 25,000 USD range and something that will hinder the BTC price from pushing any higher. Also, the level of volatility remains broadly the same as it was prior to the jump, so a destabilizing process could happen at any time and it will certainly then pull the price down. But, the more optimistic members of the crypto community stand by their notion that the actual rise is at least somewhat pushed by a positive macro environment.