A crypto market rally is happening today, with Bitcoin and most altcoins being in the green. Bitcoin price rose to $110,000 from last week’s low of $103,000, while altcoins like Mantle, MemeCore, SPX6900, and Bittensor rising by over 10% in the last 24 hours.
This article highlights some of the reasons why cryptocurrencies are going up today and the main risks ahead.
Crypto market rally caused by upcoming US-China talks
One main reason why the crypto market is rallying today is that senior Chinese officials have confirmed that they will meet this week to iron out issues ahead of the upcoming Donald Trump and Xi Jinping meeting at the APEC Summit in South Korea.
The meeting was confirmed by Scott Bessent, the Treasury Secretary, and the Chinese media. It comes at a time when relations between the two countries has deteriorated, with each issuing threats.
This evening, Vice Premier He Lifeng and I engaged in frank and detailed discussions regarding trade between the United States and China. We will meet in-person next week to continue our discussions.
China has committed to put pressure on the US as it flexes its muscle on a global scale, and all signs show that it is winning the war. It has hinted that it may cut off the US in rare earth shipments, a move that would paralyze manufacturing into the country.
Most importantly, China has hinted that it will retaliate if the US adds new tariffs and that it does not necessarily need chips from American companies.
Therefore, the upcoming talks may help to mend the outstanding issues ahead of Trump’s meeting with Xi Jinping next week. Such a move is bullish for the crypto market because it removes one of the biggest risks in the financial market.
Crypto prices rising amid Fed rate cuts hopes
The other main reason why the crypto market rally is happening is that there are hopes that the Federal Reserve will cut interest rates and end quantitative tightening (QT) next week.
Officials like Jerome Powell, Michele Bowman, and Christopher Waller have all hinted that they will support another cut in next week’s meeting. That will be the second consecutive meeting in which Fed officials have slashed interest rates.
A rate cut is supported by the fact that the American economy is not doing well, with the unemployment rate rising to 4.2% and the private sector losing over 36,000 jobs in September.
Odds of a rate cut have jumped to 96% on Polymarket. These odds will rise further after the US releases the latest consumer inflation data on Friday.
Most people on Polymarket expect the report to show that inflation rose to 3.1% in September from the previous 2.9%. An actual report that is lower than these estimates will be bullish for the crypto market.
Rising volume and short liquidations
The crypto market is rising as investors buy the dip, with third-party data showing the volume and open interest rose in the past 24 hours.
The 24-hour volume rose by 40% to $145 billion, with the futures open interest rising by 2.34% to $151 billion. CoinGlass data shows that the 24-hour volume rose to $274 billion.
These numbers have coincided with rising liquidations of short traders, which rose by 151% in the last 24 hours to $362 million. Over 118,365 traders were liquidated in this period. Bitcoin liquidations jumped to $108 million, while Ethereum had $94 million.
Potential dead-cat bounce
The main risk to be aware of is that the ongoing crypto market rally is potentially a dead-cat bounce, which is a temporary rebound that happens when an asset is in a freefall. It is also known as a false breakout.
The probability that this is a dead-cat bounce have remained high because Bitcoin has formed a double-top pattern on the daily chart and a rising wedge on the weekly one. A Bitcoin price crash would likely affect that of other crypto prices.
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