Anyone interested or invested in crypto has probably noticed a positive change in the market. Several cryptocurrencies are in the green all of a sudden, and this prompts the question, “Why is crypto going up?” Before we dive into the main reason, let’s look at two top performers in the new bullish market.
No surprises here; Bitcoin and Ethereum are both showing steady growth. On July 4, 2023, Bitcoin reached $31,000 and is now steadying at the $29,500 mark. But why is Bitcoin going up? The cryptocurrency strengthened after the U.S. Federal Reserve changed its lending rate by 25 basis points to 5.25 percent and 5.50 percent.
Ethereum has also corrected somewhat, and its recovery saw Ethereum hit its highest peak of $2,100 in April 2023 (since August 2022). This growth came directly after its hard fork, “Shapella,” was launched successfully.
The year 2022 will go down as one of the worst in cryptocurrency history. It started when FTX, a major crypto exchange and hedge fund, fell apart. The ripples of fear and uncertainty it sent through investors caused the crypto market to crash. When FTX declared bankruptcy, Bitcoin dropped by 10 percent to around $16,600, and Ethereum dropped over 8 percent to around $1,240.
Other factors that also suppressed the crypto market included the latest Binance charges, SEC allegations, and global inflation. But why is crypto going up today?
Two things that recently strengthened the crypto industry are cooling inflation and when the Federal Reserve was forced to go easy on rate hikes to counter severe liquidity problems that arose after bank contagion caused heavy losses on bond holdings.
Considering the volatile nature of crypto, it’s hard to say with certainty whether the market will drop again or continue to rise. However, a major deciding factor in the future of crypto is the current legal battle between crypto giant Binance and SEC. The latter agency wants cryptocurrencies to be reclassified and regulated as securities and not commodities.
If SEC wins, it could not only severely restrict Binance’s operations, but it can also prevent firms from dealing in cryptocurrencies. The SEC has also shown a willingness to bring to heel the top 10 cryptocurrencies (except Bitcoin and Ethereum), which won’t be good news for U.S. exchanges that want to list cryptos other than ETH and BTC.
Despite this shadow hanging over the industry, some experts are positive that increasing acceptance and adoption of cryptocurrencies will bring continual growth over the coming years. In 2023, projected revenue in the crypto industry is expected to reach $38 billion. With an estimated annual growth of 14 percent, the market could see a total revenue of $65 billion by 2027.
Three main factors determine the rise and fall of crypto prices. They are market perception, competition, and supply and demand.
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