Crypto Market Anticipates $4 Trillion Surge Following Bitcoin, Ethereum, BNB, Solana, XRP Price Recovery
The cryptocurrency market witnessed a significant uptick on Wednesday, reclaiming much of the ground lost earlier in the month.
Over the past 24 hours, Bitcoin saw a 3.3% increase, surpassing the $60,000 mark, while Ethereum rose by 3.2%. 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 surge, traders are exercising caution. One of the primary concerns revolves around the uncertainty surrounding the upcoming inflation report and the Federal Reserve’s upcoming meeting. Crypto trading firm QCP Capital expressed this sentiment, stating that investors are treading carefully ahead of the US Consumer Price Index release this week.
Market participants are closely monitoring inflation figures to gauge whether the Fed will implement a rate cut of 25 or 50 basis points in September. According to the CME FedWatch tool, there is a 100% likelihood of an interest rate cut at the next meeting, with the debate focusing on the magnitude of the cut. The market is evenly divided between a 50 basis point cut (55.5% probability) and a quarter-point cut (45.5% probability), as per CME data.
Another risk on traders’ radar is the unwinding of the yen carry trade. While the worst of the sell-off seems to have passed, experts caution that there is insufficient data to confirm a complete market recovery. The potential repercussions of the yen carry trade unwind, particularly in terms of global asset re-allocation, could have lasting effects on the markets for years to come.
The recent market turbulence has also raised questions about the narrative of cryptocurrencies as “digital gold.” During the broader market downturn earlier this month, cryptocurrencies, including Bitcoin, did not behave as expected, failing to serve as a hedge. Furthermore, Bitcoin’s correlation with gold has turned negative since July, indicating a shift in investor sentiment.
Despite the increasing recognition of cryptocurrencies as a viable alternative asset class, experts note that they are often among the first assets to be offloaded during market turmoil. Institutional acceptance of Bitcoin as a substitute for gold, a traditional asset with a long-standing reputation, remains uncertain. The distinction between Bitcoin and gold, in terms of their institutional roles, suggests that cryptocurrencies have yet to shed their speculative asset image and gain broader acceptance among mainstream investors.
