A crypto rally has ignited this week, with Bitcoin price surging above the important resistance level at $93,000 and the market capitalization of all coins rising by over $200 billion to $3.1 trillion. Some of the top cryptocurrencies like Sui, Pudgy Penguins, Virtuals Protocol, and Chainlink were among the top gainers today. Here are some of the top reasons behind the crypto market rally.
Crypto rally happening as Fear and Greed Index is rising
The crypto rally is happening as the Crypto Fear and Greed Index rebounds from its lowest level last month. It has jumped by to 22 from the year-to-date low of 8, which it tested last month.
Crypto Fear and Greed Index
As the chart below shows, the Crypto Fear and Greed Index has formed what looks like a double-bottom pattern, meaning that it may continue rising in the coming weeks. Such a move will lead to more gains in the crypto industry.
Historically, it is usually more profitable to buy cryptocurrencies when the index is on the extreme fear zone compared to when it is in the extreme greed area.
Vanguard effect is going on
The crypto rally is also happening because of Vanguard, the second-biggest company into the asset management industry. In a statement this week, the company said that it would start offering crypto assets on its platform, something it has avoided even as some top competitors like BlackRock and Franklin Templeton launched products.
Vanguard will not launch its crypto ETFs for now. Rather, the company will make it possible for users to buy ETFs and mutual funds provided by other companies like BlackRock and Canary.
THE VANGUARD EFFECT: Bitcoin jumps 6% right around US open on first day after bitcoin ETF ban lifted. Coincidence? I think not. Also $1b in IBIT volume in first 30min of trading. I knew those Vanguardians had a little degen in them, even some of the most conservative investors
The announcement was notable as Vanguard is the second-biggest asset manager in the United States with millions of customers and $10 trillion in assets under management. As such, there is a likelihood that some of these customers will start buying these ETFs
Meanwhile, Michael Dell announced that he would donate $6.5 billion, which will go to 25 million kids in the United States. These funds will be invested in the financial market and be available to kids when they turn 18 years. As such, there is a likelihood that some of these funds will be invested in crypto funds.
Bitcoin and Ethereum ETF inflows
The crypto rally is also happening as investors start to move back to crypto ETFs after the recent outflows.
Data compiled by SoSoValue shows that spot Bitcoin ETFs had over $58.5 million in inflows on Tuesday, much higher than the previous day’s $8.48 million. These funds have brought in over $300 million in the last five trading days.
Spot XRP ETFs had $67 million in inflows, bringing the cumulative total to over $824 million. Solana ETFs hauled $45 million on Tuesday, while Dogecoin funds had $513k in inflows.
The slow comeback is a sign that some American investors believe that the crypto rally is coming soon.
Trump hints at Kevin Hassett as the next Federal Reserve Chair
The other main reason why the crypto market rally is happening is that Donald Trump has hinted that he will nominate Kevin Hassett, a current White House official, to become the next Federal Reserve Chair.
He hinted that in a press conference in the White House on Tuesday, while also confirming that the formal announcement will be made earlier next year, a move that will undercut Jerome Powell.
Kevin Hassett has continually advocated for interest rate cuts, meaning that they may drop to 1% next year. He is also an advocate for the crypto industry as he served as an advisor to Coinbase, the biggest exchange in the United States.
There are other reasons behind the ongoing crypto rally, including the rising open interest, falling liquidations, and the continued accumulation by companies like Strategy and BitMine.
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