The cryptocurrency market experienced a strong recovery on March 21, with its capitalization rebounding to $2.498 trillion after falling to a two-week low of $2.208 trillion the day before.
The nearly 13% jump was primarily led by top cryptocurrencies Bitcoin (BTC) and Ether (ETH), which rose approximately 12.5% and 16.5%, respectively, during the same period.
TLDR
The cryptocurrency market capitalization rebounded sharply on March 21, rising about 13% from the previous day’s two-week low.
Bitcoin and Ether led the gains, rising approximately 12.5% and 16.5%, respectively.
The market recovery was primarily driven by the Federal Reserve’s dovish signals during the FOMC meeting on March 20, which maintained projections for three interest rate cuts in 2024.
The ongoing Bitcoin Halving euphoria and increasing institutional investments in spot ETFs have also contributed to the market’s optimism.
The surge in the cryptocurrency market triggered significant short position liquidations, totaling nearly $180 million in 24 hours, with Bitcoin and Ether leading the liquidation spree.
The market’s resurgence can be attributed to several factors, with the Federal Reserve’s dovish signals during the Federal Open Market Committee (FOMC) meeting on March 20 being the primary catalyst.
Federal Reserve officials maintained their projection for three interest rate cuts in 2024, demonstrating a cautious approach to reducing their bond portfolio and indicating that they are not overly concerned about recent increases in inflation.
Fed Chairman Jerome Powell emphasized the need for further proof of declining inflation rates while suggesting that it might be appropriate to begin softening monetary policies later this year.
Following the Fed’s comments, investor sentiment shifted, as evidenced by a 0.94% drop in the U.S. dollar index (DXY), highlighting a resurgence of risk appetite among investors after recent market declines.
This trend was further reinforced by the persistent Bitcoin Halving euphoria, with the market remaining optimistic about Bitcoin’s upside prospects before and after its scheduled halving event in April, despite the cryptocurrency’s recent correction and a slowdown in inflows to its spot exchange-traded funds (ETFs).
Dovey Wan, the founder of investment firm Primitive Ventures, treats the ongoing Bitcoin price decline as the second stage of a “three leg” phase around halvings, wherein BTC undergoes 30-50% corrections but follows the moves up with strong bullish rebounds.
usually we have 3 structural legs in a bull
– First leg pre BTC ATH, this leg is 6-8month earlier in this cycle hence caught many off the guard
– second leg comes after halving and after a 20-30% correction (this is the pull back everyone is waiting for) from the first leg. In… https://t.co/UnKhjqRIs4
— Dovey “Rug the fiat” Wan (hiring) (@DoveyWan) March 20, 2024
Additionally, Standard Chartered forecasts that Bitcoin’s price could reach $150,000 by the end of 2024, driven partly by increasing institutional investments in spot ETFs.
The surge in the cryptocurrency market has triggered significant short position liquidations, hitting almost $180 million in just 24 hours. Bitcoin’s short positions led this liquidation spree, totaling $65.50 million, followed by Ether’s $47.38 million in liquidations.
Despite short-sellers’ challenges, the crypto market’s open interest, which tallies the total value of outstanding futures contracts across exchanges, is rising, suggesting heightened market engagement and positive investor sentiment.
In addition to Bitcoin and Ether, other cryptocurrencies such as Dogecoin (DOGE), Litecoin (LTC), and Bitcoin Cash (BCH) also experienced significant gains, driven by Coinbase’s plan to offer futures contracts on these assets.
he broad-market CoinDesk 20 Index (CD20) was up nearly 3% over the past 24 hours, reflecting the overall positive sentiment in the crypto market.
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