Last week, the crypto market saw an excellent jump in total market cap. Over $110,000,000,000 worth of all coins were added to the crypto market cap, signaling a bullish momentum for cryptocurrencies. This increase revitalized the market cap, pushing it back to $4 trillion. The reasons for this unprecedented growth are attributed to several factors, specifically the anticipated Fed interest rate cut.
For crypto newbies, market cap is the total value of cryptocurrencies.
Market cap = Price of each coin multiplied by circulating supply of that coin.
Key factors for $110 billion mega jump
Anticipation of Fed rate cut
Crypto traders are eagerly awaiting the hotly anticipated announcement — the much-anticipated interest rate cut! According to reports, the US Federal Reserve will announce about interest rate decision on or around September 17.
A lower interest rate means more traders tend to buy more crypto. If interest rates go down, traders can borrow more money from banks to buy crypto from exchanges.
High ETF inflows
Spot Bitcoin and Ethereum ETFs are gaining popularity among big investors like BlackRock and Fidelity. When money from institutional investors flows in, that tends to shake the market significantly.
Strong market performance by major cryptocurrencies
From crypto bellwether Bitcoin to memecoin superstars like Pump.fun, major cryptocurrencies performed well, leading to gradual price hikes. Bitcoin shifted from its $110,000 price range to $116,000 by the end of last week. At the time of reporting, the coin maintained its price between $115,000 -$116,000 level.
Besides, Ethereum, XRP, Solana, BNB, and other altcoins danced to the bullish market moves. As more investors came to crypto, the price moved up, subsequently affecting the total crypto market cap.
What are the likely effects of a big market cap surge?
- A big surge signals growing optimism and increased investor confidence.
- More money flows into the market, meaning higher trading activity and increased liquidity.
- Sharp hikes in market cap can increase volatility, moving prices up quickly.
- Although prices can rise rapidly, corrections may be steep. Here, correction means a temporary price drop.
Historically, the crypto market drops significantly for the short term following a sudden increase in price. For instance, last month, Bitcoin hit an all-time high of approximately $124,000. However, after this sudden surge, the crypto king fell steeply, reaching $108,000.
Final thoughts
The crypto market is always volatile. Just a few weeks ago, the crypto market was on a heater. The price of major coins dipped, and the market cap lost some ground. However, as last week ended, the market bloomed with new hikes and gains. The addition of $110 billion to the $4 trillion market cap highlights one clear truth: cryptocurrencies are poised for major price surges. If a potential interest rate cut occurs, the market will shine even brighter.
