The cryptocurrency market’s capitalization has recovered sharply today, wiping out a good portion of the losses previously incurred.
On March 21, the crypto market valuation rebounded to $2.498 trillion after falling to a two-week low of $2.208 trillion a day before — a 13% jump.
Total crypto market cap vs. BTC/USD and ETH/USD daily performance chart. Source: TradingView
Leading the gains were top cryptocurrencies, Bitcoin (BTC) and Ether (ETH), which rose approximately 12.5% and 16.5% in the same period.
Cointelegraph discusses the core reasons behind the crypto market’s recovery rally.
Fed raises rate cut expectations
Optimism in the crypto market returned primarily in the wake of the Federal Open Market Committee (FOMC) meeting on March 20.
United States Federal Reserve officials maintained their projection for three interest rate cuts in 2024, showing a cautious approach toward reducing their bond portfolio. In turn, their outlook indicated that they are not overly concerned about recent increases in inflation.
Fed Chair Jerome Powell emphasized the need for further proof of declining inflation rates, but he also mentioned that it might be suitable to begin softening monetary policies later in 2024. The CME FedWatch Tool now sees a 68.3% possibility of a rate cut in June.
Target rate probabilities for June 12, 2024 Fed meeting. Source: CME
Bitcoin, Ether and other cryptocurrencies started gaining shortly after picking the Fed’s dovish signals, hinting at a resurgence of risk appetite among investors after recent market declines.
Following the Fed’s comments, this trend was further underscored by a 0.94% drop in the U.S. Dollar Index (DXY), highlighting a shift in investor sentiment.
TOTAL crypto market cap vs. DXY daily performance chart. Source: TradingView
Sticky Bitcoin halving euphoria
The crypto market’s recovery occurred in response to a persistent Bitcoin halving euphoria.
The market remained optimistic about Bitcoin’s upside prospects before and after its scheduled halving event in April. This optimism persists despite the cryptocurrency’s 17.5% correction and a recent slowdown in inflows…
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