Why is crypto rising today? Complete analysis

The crypto market cap now stands at $2.57 trillion, after hovering between $2.17 and $2.7 trillion since March. Many macroeconomic factors come into play here. So why are cryptocurrency prices increasing?

Why are cryptocurrency prices increasing?

Crypto market capitalization, the sum total of value in the market, has reached a range not seen since late 2021 over the past few months. Today, Bitcoin (BTC) is trading at around $68,390 after rising 7% last week. This represents an increase of 312% since the lows seen in 2022 after the FTX exchange collapsedan event that had a major negative impact on the entire industry.

The crypto price increase may be due to the positive sentiment currently developing following the new ETF approvals.

Ethereum ETF Approvals May Cause Shortage and Increase Demand

Last week, US regulators have approved several ETFs for Ethereum (ETH). An Ethereum ETF, or exchange-traded fund, is an investment fund offered on an exchange with ETH as the underlying asset. ETFs allow traders to bet on the price of ETH without actually owning it.

This is a big problem for two reasons. First, it could significantly increase the amount of money entering the crypto market. Although investors who purchase the ETF’s shares do not own ETH themselves, the fund they invest in must purchase and store large sums of Ethereum coins to collateralize the ETF.

Thus, an ETF can create a supply shock or shortage of the underlying asset, making it scarcer and, in some cases, more valuable. The SEC approved not just one ETF, but 8 different funds.

As it stands, the amount of circulating ETH staked is only 27%, compared to 63% for Solana and 65% for Cardano.

If Ethereum’s stakes rise to compete with competitors, the supply shock problem could become even more pronounced, potentially leading to an ETH bull run.

It’s worth noting that even though the price of BTC dropped around 4% on May 28, ETH actually saw a 4% increase and is up 17% in the last month and 113% year-over-year. . Investors are closely watching the cryptocurrency rise today for further developments.

Open interest in Ethereum futures on centralized exchanges also just hit an all-time high and Bitcoin ETF inflows, or money invested, are up this week, indicating overall bullish sentiment.

Interest Rates and Halving

The supply of BTC was halved in April, an event that often precedes an increase in the price of BTC. However, investors may have held back due to interest rates that are between 5.25% and 5.5%, the highest in 23 years.

Higher rates offer better returns on traditional investments like bonds and yields, which could make riskier investments like Bitcoin less attractive.

The Fed recently indicated that rates will likely remain unchanged for the summer. However, there are six more chances for the Fed to cut rates before the end of the year, and speculation that this is likely to happen could be priced into the market and increase the price of crypto.

New data from the Consumer Price Index (CPI), used to measure inflation, will be released on June 12, which could impact the Fed’s decision, another possible factor in the development prices today.

Today’s Top Winners: The Moving Parts

As in the crypto space, Notcoin (NOT) with an increase of 26% in 24 hours, Celestia (AIT) up 15%, and Chiliz (CHZ) up 11%. This week, NOT also takes the top spot with an increase of 68%. FLOKI is up 33% this week and ONDO is up 30%.

As the macroeconomic situation continues to develop, we will likely see greater volatility in the crypto markets.

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