Bitcoin and other altcoins could be about to start a new crypto bull run after going parabolic on Monday and Tuesday. BTC jumped to $105,000, while top coins like Sei, Movement, Useless Coin, and Launch Coin on Believe jumped to over 20%.
Here’s the top reasons why Bitcoin and top altcoins are going up, and whether the gains will stick.
Crypto bull run happened as the Middle East crisis cooled
The main reason why Bitcoin and other altcoins are in a new crypto bull run is that there are signs that the crisis in the Middle East has cooled.
Donald Trump launched bombs to three key sites in Iran during the weekend to destroy its nuclear program. He also threatened to implement new regime change in the country.
Iranian response to the crisis was relatively mild as officials did not want further escalation. It launched missiles towards a US base in Qatar, none of which hurt any Americans.
In a statement, Donald Trump noted that Iran had given it an advanced warning before the attack, which explains why Qatar paused all air travel in the country before the attack.
Therefore, while the missile attacks between Israel and Iran may continue, it is likely that further escalation will end. This explains why the crude oil price has crashed, with Brent and West Texas Intermediate (WTI) falling to $68 and $66, respectively.
Read more: Asian markets open: stocks rise after Iran-Israel ceasefire news; Sensex to open higher
Dovish Federal Reserve statements
Bitcoin and other cryptocurrencies are in a strong bull run because of recent dovish Federal Reserve statements.
In a statement to CNBC on Friday, Christopher Waller noted that the impact of Trump’s tariffs on inflation will be muted. He likely based this on recent economic numbers, which showed that the headline consumer inflation rose from 2.3% in April to 2.4% in May, lower than the median estimate of 2.5%.
Therefore, Waller said that he will support cutting interest rates as early as in July. He said:
“We could do this as early as July. I think we’ve got room to bring it down, and then we can kind of see what happens with inflation. We’ve been on pause for six months to wait and see, and so far the data has been fine.”
In a separate statement on Monday, Michele Bowman, another Fed official, said:
“Should inflation pressures remain contained, I would support lowering the policy rate as soon as our next meeting in order to bring it closer to its neutral setting and to sustain a healthy labor market.”
Bitcoin and other altcoins thrive when the Federal Reserve has embraced an easy money policy stance.
Therefore, traders will pay a close attention to the upcoming Jerome Powell testimony in Congress in which he will hint on when to expect an interest rate cut.
Bitcoin ETF demand continues
Meanwhile, third-party data shows that Bitcoin demand continues rising. For example, spot Bitcoin ETFs added over $350 million on Monday even as geopolitical risks remained. This addition brought the total cumulative inflows to over $47 billion.
The rising demand for Bitcoin comes at a time when the supply of these coins on exchanges has continued to fall this year. Data shows that this supply has plunged from over 1.5 million earlier this year to 1.1 million today.
The demand is coupled by the fact that Bitcoin has formed a cup-and-handle pattern, which often leads to more gains.
The risk, however, is that the ongoing Bitcoin and altcoins surge is part of a dead-cat bounce. A DCB is usually a brief comeback of a cryptocurrency that is followed by further downside.
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