The total crypto market capitalization has risen by 3.2% over the last 24 hours, reaching a new high of $3.71 trillion on December 16th. This significant increase is accompanied by a substantial surge in trading volume, which has jumped by 27% to $162 billion.
Bitcoin and Ethereum Rally
The largest cryptocurrency by market capitalization, Bitcoin (BTC), has seen a notable rise of 3.5% over the last 24 hours, trading at $81,587. This is just below its all-time high of $106,488 set earlier in the day on December 16th.
Ethereum (ETH), the second-largest cryptocurrency, has also experienced a significant increase, climbing by 3.25% to trade around $3,976 at the time of publication.
Factors Driving the Crypto Market
Prospects of Bitcoin Becoming US Reserve Asset
One of the primary factors contributing to the bullish sentiment in the crypto market today is US President-elect Donald Trump’s recent comment on his intentions to build a strategic Bitcoin reserve and do "something great" with crypto. Trump could potentially issue an executive order on "day one" of his second term to designate Bitcoin as a reserve asset status.
Jack Mallers, founder and CEO of Strike, suggests that such a move would not be the size and scale of 1 million coins but would still be a significant position. Additionally, Satoshi Action Fund CEO Dennis Porter expects at least 10 states to introduce a Bitcoin reserve bill in total, following Texas and Pennsylvania’s lead.
US Federal Reserve Expected to Reduce Interest Rates
The US Federal Reserve is anticipated to reduce the benchmark borrowing cost by 25 basis points to the 4.25% to 4.5% range, marking a total of 1% interest rate reduction since September 18th. Market participants expect the latest core Personal Consumption Expenditures (PCE) price index reading this week, which is the Fed’s preferred measure of inflation.
Institutional Demand for Spot ETFs Remains High
The crypto market’s ongoing gains are in alignment with the significant capital flows into spot exchange-traded (ETF) funds. Farside Investors reported that approximately $2.16 billion flowed into US-based spot Bitcoin ETFs over the Dec 9 to Dec 13 week, while spot Ethereum ETFs have experienced two weeks of continuous inflows.
Crypto Market Cap Nears $4 Trillion
Data from Cointelegraph Markets Pro and TradingView shows that TOTAL – the total market capitalization of all cryptocurrencies – has rallied more than 34% since November 11. This price action has recorded a series of higher highs and higher lows, leading to the appearance of an ascending parallel channel on the daily chart.
An ascending parallel channel pattern is a chart pattern that indicates a bullish trend and is characterized by two upward-sloping parallel lines. A breakout above the channel can signal a continuation of the move higher, while a breakdown below can indicate a possible trend change.
The price must hold above the immediate support provided by the lower boundary of the channel at $3.57 trillion to sustain the uptrend. If this happens, TOTAL may move first toward the middle boundary of the channel at $3.73 trillion and later to the upper boundary at $3.9.
Conclusion
The crypto market is experiencing a bullish trend, driven by factors such as the prospects of Bitcoin becoming a US reserve asset, institutional demand for spot ETFs, and the expected reduction in interest rates. As the season is quite favorable for cryptocurrencies, prices are expected to move even higher toward the end of the year.
Disclaimer
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
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