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Crypto bulls are looking to expand the gains made in the first half of the year with positive signals from the bond and stock markets. The correlation between crypto and the stock market has led many analysts to predict a drop in prices after disruptive macroeconomic factors in 2022.
Fed Expectations!
Current realities create a sharp contrast with slowing inflation and signals from the Fed to pause previous interest rate hikes. Overall, both markets reached their peaks this year as they emerged from the chaos of 2022. Bitcoin (BTC), the market leader that lost over 55% of its value last year, gained 80% in value this year due to institutional inflows.
Despite a rough start to the year due to interest rate hikes, tech stocks rallied in recent weeks as the tech-focused Nasdaq reached its highest level in 52 weeks on July 12.
The AI frenzy, in particular, fueled the rise in the stock market, with seven stocks, including Google, Amazon, Nvidia, and Apple, accounting for 55% of the NASDAQ 100 and 27% of the S&P 500. Market analyst Lyn Alden stated that liquidity in the bond market would have a positive impact on crypto and other liquidity-focused assets. The crypto analyst stated the following:
However, something started to change in the fourth quarter of 2022. The US Treasury started injecting liquidity into the market, offsetting the Fed’s tightening and causing the dollar index to decline. The S&P 500 found a bottom and started gaining stability. Liquidity in the government bond markets began to loosen. Various liquidity-focused assets like Bitcoin made a comeback.
Bitcoin Expectations!
Bulls have been in a frenzy since the increase in interest rates halted following successive hikes by the Fed in recent months. Bitcoin’s price gained momentum from increased liquidity and renewed institutional interest in the asset. The increase in interest rates could slow down market growth as investors tend to move away from high-risk assets.
Experts predict a bullish trend in Bitcoin’s price when the US market is at its peak for the Bitcoin Exchange Traded Fund (ETF) and coincides with the next BTC halving. Favorable interest rates and recent events like Ripple’s (XRP) partial victory against the Securities and Exchange Commission (SEC), along with the stock market, have sparked a sense of optimism.
While XRP continues to sustain an increase of over 58.92% in the past seven days, other altcoins like Cardano (ADA), Solana (SOL), and Dogecoin (DOGE) recorded gains of 6.17%, 16.63%, and 6.40%, respectively.
