Crypto Market Prepares for $4 Trillion Surge as Bitcoin, Ethereum, BNB, Solana, XRP Prices Rebound
The digital currency market witnessed a significant surge on Wednesday, recovering most of the losses incurred earlier this month. In the last 24 hours, Bitcoin’s value rose by 3.3%, surpassing the $60,000 mark, while Ethereum saw a 3.2% increase. Other altcoins also followed suit, with Cardano up by 2.7%, Solana by 2.3%, Dogecoin by 2.2%, Shiba Inu by 2.3%, BNB by 1.2%, and XRP by 2.1%.
Despite this recent uptrend, traders are exercising caution due to various uncertainties. One major concern is the upcoming inflation report and the Federal Reserve’s upcoming meeting. According to crypto trading firm QCP Capital, investors are closely monitoring the US Consumer Price Index (CPI) for insights into potential rate cuts by the Fed in September.
The CME FedWatch, a tool tracking market expectations of interest rate changes, indicates a 100% likelihood of an interest rate cut in the upcoming September meeting. The debate now revolves around the extent of the rate cut, with nearly equal probabilities assigned to a 50 basis point cut and a quarter-point cut.
Traders are also factoring in the risks associated with the unwinding of the yen carry trade. While the worst of the market turmoil seems to have passed, experts caution that the market’s stability is not yet confirmed. TD Securities’s Richard Kelly highlighted the potential unwinding effects, especially considering the undervaluation of the yen.
The repercussions of the yen carry trade extend beyond immediate market reactions. Global asset re-allocation stemming from this trade could have long-lasting effects on the market, potentially impacting over $4 trillion in assets, as reported by Reuters.
The recent market volatility has also challenged the perception of cryptocurrencies as “digital gold.” During the market downturn earlier in the month, Bitcoin did not behave as a hedge asset, and its correlation with gold has turned negative since July. Despite the increasing acceptance of crypto as an alternative asset class, experts note that it is often one of the first assets traders divest during market uncertainties.
While there is growing interest in cryptocurrencies as an alternative investment, it remains to be seen if they can shed the speculative asset label and establish themselves as a more stable investment option. The evolving relationship between institutional investors, traditional assets like gold, and digital currencies will shape the future landscape of the cryptocurrency market.
