Is the bull back? What’s driving the latest crypto rally and what could it mean?

What's driving the market uptick?

There are a few likely contributors to the recent crypto boost:

• Corporate and institutional adoption - In the second half of 2023, some of the biggest financial firms on the planet, including BlackRock, Fidelity Investments and Ark Invest, filed to launch spot Bitcoin ETFs. And in August, payment giant PayPal launched its first stable coin, PayPal USD. These heavy hitters getting involved in crypto lending and services helps validate the space, providing a sense that crypto is continuing to mature into a mainstream asset class.
  
  
• Regulatory clarity - Governments are starting to provide more concrete rules and guardrails for crypto trading and activity, which can provide more confidence to both retail and institutional investors.
  
  
• Technical trading factors - Crypto prices appeared oversold heading into the recent rally. Technical traders likely saw the upside potential and jumped back in, helping propel prices higher.
  
  

What’s the impact on prices generally?

The rally has been broad-based, with Bitcoin surging around 50% from recent lows (surpassing $35,000 at one point) and Ethereum gaining over 60%. Many major altcoins have posted gains of 50% or more. Crypto market capitalisation has climbed back over $1 trillion.

The surge shows there is still tremendous and growing interest in crypto among investors. It also suggests the bear market that began in late 2021 may be bottoming out or coming to an end.

What’s the impact on major coins like BTC and ETH?

As the two largest cryptocurrencies, Bitcoin and Ethereum tend to drive market momentum and attract the most attention. Bitcoin reclaiming the psychologically key $20,000 level (and surpassing $35,000 at one point) has restored some bullish conviction. Meanwhile, Ethereum's gains have been boosted by its major ‘Merge’ network upgrade. The two are serving as flagships for the broader crypto sector. Their rallies also typically lift prices for smaller altcoins, as investors become more willing to take risks. 

What’s happening in the altcoin market?

Many altcoins have seen massive spikes, with some "memecoins" like Dogecoin, BONK and Shiba Inu doubling or more. Plus crypto tied to emerging sectors like metaverses and Web3 have also surged.

The altcoin rally reflects a rebirth of the "risk on" attitude and profit-seeking that characterised the 2021 bull market. Investor selection is key, as coins with deeper value and real-world utility are likely to outlast hype-driven coins and tokens. 

What’s next for the crypto market

The recent crypto revival still requires caution and discipline. But for believers in the long-term promise of blockchain and digital assets, the trends are beginning to point upward again for Bitcoin, Ethereum, and many more. 

There are also some huge milestones on the horizon for the industry which are sure to generate wider interest. Most notably is the planned Bitcoin halving event, which is expected to occur early to mid-2024. This is one of the most pivotal events on Bitcoin's blockchain which sees the reward for mining cut in half, reducing the rate at which new coins are created which in turn lowers the available amount of new supply. The previous two halving events in 2016 and 2020 respectively saw healthy increases in Bitcoin’s price. And while halving isn’t the only factor impacting price, it's an important event for existing and potential investors. Stay tuned. 

As always, it’s wise to only invest an amount you can afford to lose, and evaluate the fundamentals. But the crypto market is showing more signs of life after a brutal bear market cycle.

Disclaimer

The information shared in this article does not constitute investment advice. Investing carries risks. Make sure to conduct your own research before concluding a transaction.