The cryptocurrency market capitalization has reached $2.57 trillion, fluctuating between $2.17 trillion and $2.7 trillion since March. Various macroeconomic factors are contributing to this trend. So, what is driving the surge in crypto prices?
Ethereum ETF approvals are potentially causing scarcity and boosting demand. Interest rates and the recent Halving event are also playing a role. Let’s delve deeper into these reasons for the current market dynamics.
The market cap of cryptocurrencies, representing the total market value, has reached levels not seen since late 2021 in recent months. Presently, Bitcoin (BTC) is trading around $68,390, showing a 7% increase in the last week. This surge marks a 312% rise from the lows observed in 2022 following the collapse of the FTX exchange, which had a significant negative impact on the industry.
The recent spike in crypto prices can be attributed to the positive sentiment emerging from the approval of new ETFs. US regulators have greenlit multiple ETFs for Ethereum (ETH) in the past week. An Ethereum ETF allows traders to speculate on ETH’s price without owning the asset. This development could lead to a supply shock, as the ETFs require significant amounts of Ethereum coins for collateral.
The approval of multiple ETFs by the SEC could potentially drive more capital into the crypto market. With only 27% of circulating ETH being staked compared to competitors like Solana and Cardano, a supply shortage could make ETH more valuable. If Ethereum staking increases to match rivals, it could trigger a bullish run for ETH.
Although Bitcoin saw a slight decline in price recently, ETH experienced a 4% increase and has surged 17% in the past month and 113% over the last 12 months. Investors are closely monitoring the evolving cryptocurrency landscape for further developments.
Additionally, interest rates reaching a 23-year high at 5.25% – 5.5% and the recent Halving event for BTC could be influencing investor behavior. Higher rates offer better returns on traditional investments, potentially making riskier assets like Bitcoin less attractive. The Fed’s indication of maintaining rates for the summer, along with upcoming CPI data on June 12, could impact market sentiments.
Top gainers in the current market include Notcoin (NOT) with a 26% increase, Celestia (TIA) up by 15%, and Chiliz (CHZ) rising by 11%. Notcoin also leads the weekly gains with a 68% rise, followed by FLOKI with a 33% increase and ONDO with a 30% surge.
As the macroeconomic landscape evolves, we can expect continued volatility in the crypto markets. Investors are closely monitoring these developments to capitalize on potential opportunities in the crypto space.