Cryptocurrencies rose on Tuesday as traders started moving back to the market. Bitcoin, which sets the tone in the crypto industry rose to a high of $61,453, its highest point since August 14 and 24% above its lowest point this year. This recovery means that Bitcoin has moved into a local bull market.
Bitcoin’s recovery triggered big gains in the crypto industry. AAVE, the third-biggest player in the decentralized exchange (DEX) industry, rose for the third consecutive day, reaching a high of $130, its highest point since April this year. It has jumped by more than 82% from its lowest point this month.
Bittensor (TAO), a popular AI crypto has also crawled back, rising to a high of $302 after falling to $163 earlier this month. This rally has brought its market cap to over $2.12 billion.
Syscoin (SYS), one of the top Bitcoin modular networks, rose to a high of $0.2173, its highest level since April 28. At its peak, the coin was up by over 266% from its lowest level this year.
The other top-performing coins were the likes of Dogwifhat (WIF), Wormhole (W), Neo, Aptos, and Brett. All these tokens rose by over 9%.
US dollar crash and stocks performance
The first reason why Bitcoin and other coins are rising is that external conditions are friendly. In the US, the Dow Jones index has risen in the past six consecutive days and is nearing its all-time high. It has soared by almost 7% from its lowest point this month.
It is not alone as other US indices have done even better. The S&P 500 index has jumped in the past five days and was trading at $5,608, its highest level since July 8. It has jumped by almost 10% from its August, meaning that it is about to move to a bull market.
The tech-heavy Nasdaq 100 index has moved to a bull market as it jumped by over 13% from its lowest point on August 5.
This trend is happening globally, where stock indices like the Nikkei 225, Nifty 50, and the Hang Seng have all erased most of their losses earlier this month.
Meanwhile, the US dollar index (DXY) has nosedived from the year-to-date high of $106.53 to a low of $101.92. The VIX index has also crashed while the fear and greed index has risen from extreme greed earlier this month to the neutral point of 50.
All these factors mean that most investors have now embraced a risk-on sentiment as we saw during the Covid-19 pandemic. At the time, most investors moved to risky assets like cryptocurrencies, emerging market currencies, and stocks.
In most cases, Bitcoin and other altcoins do well when this sentiment is spreading in the market.
Bitcoin had supportive technicals
The other catalyst for Bitcoin and other cryptocurrencies is that Bitcoin formed bullish patterns on the short-term and long-term chart timeframes.
In a recent article, we noted that Bitcoin had formed a hammer, falling broadening wedge, cup and handle pattern on the weekly and monthly timeframes. These are all bullish chart patterns that lead to a strong recovery.
Now, on the four-hour chart, Bitcoin has formed an inverse head and shoulders pattern, a popular bullish sign. This pattern is characterised with a head $56,142 and shoulders at $57,746. The neckline is at $61,453. Therefore, there is a likelihood that Bitcoin will have a bullish breakout as buyers target the key target at $62,760, its highest point on August 8.
While this chart is focused on Bitcoin, it is important in the crypto industry since most coins have a close correlation with BTC.
More fundamental reasons
Additionally, cryptocurrencies like AAVE, Bittensor, and Syscoin jumped because of several fundamental factors.
First, the US election odds have narrowed in the past few days, especially after Kamala Harris unveiled her economic platform. Data by Polymarket shows that Trump is stuck at 49% while Kamala has moved to 50%. Last week, Kamala had a 6 point lead, meaning that her lead has narrowed.
Donald Trump has appealed for votes from the crypto industry. In a speech at a crypto conference, he said that he would be a big crypto champion and that he would ensure that the US won’t sell its coins. Data by Arkham shows that he owns crypto worth over $3.4 million. Still, cryptocurrencies do well regardless of who is the president.
Second, data shows that whales have been accumulating Bitcoin in the past few weeks. Data by Santiment shows that whales have added almost 95k in the last six weeks.
Third, cryptocurrencies will likely do well when the Federal Reserve starts cutting interest rates in September and the upcoming end of the summer season. In most cases, cryptocurrencies do well when the Fed cuts interest rates.
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