Cryptocurrency Market Soars Amid Return of Risk-On Mood and Increased Trading Activity
Summary:
The cryptocurrency market experienced a surge on April 22, with the total market capitalization increasing by 2.65% to $2.38 trillion. Bitcoin (BTC) and Ether (ETH) led the gains. The rise is attributed to the return of a risk-on mood in traditional markets, notably S&P 500 futures, hinting at investor confidence. Crypto derivatives also saw increased activity, signaling more trading and speculation. Several indicators point towards continued market optimism, suggesting that the crypto market's long-term bullish trend remains intact.
April 22 observed an upward trend in the cryptocurrency market, as total market capitalization increased by 2.65% to $2.38 trillion. This surge was led by the reputable digital currencies, Bitcoin (BTC) and Ether (ETH), both presenting a jump of 2.40% and 2.80% respectively. Riding the wave of this growth was the return of risk-on sentiment across conventional finance markets.
On the same day, S&P 500 futures showed a promising 0.33% rise to 5,031 points, indicating a noticeable shift of investor attention away from the escalating geopolitical discord in the Middle East towards the forthcoming corporate earnings disclosure, including announcements from tech behemoths like Microsoft, Meta, and Alphabet.
As per Bloomberg’s recent Markets Live Pulse poll, which noted responses from 409 participants, almost two-thirds believe that earnings would spark a lift in the U.S. benchmark equity. This optimistic stance towards the S&P 500 is also influencing the cryptocurrency market, boosted by a month-high positive correlation.
The Bitcoin-S&P 500 correlation began its ascent following the geopolitical disturbances involving Iran's missile and drone assault on Israel on April 13, which led to investors adopting a more cautious approach.
The net inflow into Bitcoin exchange-traded funds (ETFs) has once again turned positive following ample outflows. On April 19, these funds collectively recorded an influx of approximately $60 million, initiating the first instance of positive daily net flow after witnessing $319 million in outflows over the prior week. Cryptocurrency markets have since reciprocated with a substantial 14% capitalization rise.
An increase in inflow following a price slump usually indicates investor optimism for future gains, suggesting a buy-in opportunity at reduced prices with hopes for market rally.
Parallelly, trading activity in the derivatives section of the crypto market also experienced a surge. With the open interest (OI) in options and futures markets showing growth of 1.84% and 1.19% respectively within the last day, an increase in retail investment speculation is evident. Institutions mirrored this trend, with a 1.70% overnight rise observed in Bitcoin Futures OI on the Chicago Mercantile Exchange (CME).
Observations revealed an 8.81% increment in futures volume spanning 24 hours, hinting at an upswing in the market's liquidity. This suggests a progressively healthy trading atmosphere and a likely precursor to spot market movements, indicating an augmented investor confidence.
Compounding today’s gains, numerous indicators are inclined towards a bullish market sentiment. The upward trend is underscored by the proximity of the market cap rebound to the historical ascending trendline support. With the market cap demonstrating a strong bounce back from this line, it affirms a convincingly robust support level, implying a preservation of the longstanding bullish tendency.
Moreover, the daily relative strength index (RSI) offers an indication of sturdy psychological support around the 38-point mark, a point where historically 80% rebounds have been recorded.
Published At
4/22/2024 2:27:11 PM
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