Business

Rising Trends in Crypto Markets Driven by “Chinese New Year” and “ETF Developments”

The recent upward momentum in the cryptocurrency market has been attributed to the anticipation of the approval of Ethereum spot ETFs and the commencement of the Chinese New Year, according to crypto experts. Mertkan Oruç reports.

Based on information compiled by Anadolu Agency from the analysis firm Coinmarketcap, the market capitalization of the cryptocurrency market has surpassed 2 trillion dollars with the recent surges. This value, which had reached a record level of 3 trillion dollars in November 2021, had last been calculated to be over 2 trillion dollars in March 2022.

One of the contributing factors to the recent surge has been the acceptance of spot Bitcoin ETF applications in the United States. Following the approval of 11 applications by the U.S. Securities and Exchange Commission (SEC), the trading volume in this field exceeded 45 billion dollars this week. Simultaneously, the price of Bitcoin surpassed $52,000 during this period.

The Chair of the Department of Economics at Beykent University Faculty of Economics and Administrative Sciences, Assoc. Prof. Dr. Mustafa Batuhan Tufaner, noted that the cryptocurrency market has experienced a highly dynamic period. Tufaner pointed out that a brief downturn occurred in the market with the postponement of the possibility of the Federal Reserve’s interest rate cut starting in March due to the decline in the dollar index and the approval of spot Bitcoin ETF.

Tufaner emphasized the impact of global developments on the cryptocurrency market, stating, “The expectation of the approval of spot Ethereum ETFs supports the rise in the cryptocurrency market. On the other hand, global macroeconomic data also influences pricing in this field. Inflation data, especially those coming from the U.S., will be crucial.”

Explaining that inflation data exceeding expectations may lead the Fed to adopt a hawkish stance and postpone interest rate cuts, Tufaner suggested that this situation could exert pressure on the cryptocurrency market along with the rise in the dollar index.

Tufaner highlighted that the control of inflation in the U.S. and its realization in line with expectations would be supportive for the cryptocurrency market. He also noted that geopolitical developments are another crucial factor and that increased geopolitical tensions could strengthen the dollar index, negatively affecting investor risk appetite and posing a significant risk to the cryptocurrency market.

Impact of the Chinese New Year

Crypto expert Helin Çelik also pointed out the effect of the upcoming Bitcoin halving in April on current prices. Çelik, referring to the positive impact of the four-year cycle where the bitcoin reward per block is halved, discussed the influence of institutional purchases and the week-long Chinese New Year holiday in China on the overall market.

Çelik stated, “We can call this week the ‘Golden Week,’ one of China’s biggest holidays. Despite the government’s strict policies, 88% of investors still predominantly allocate cryptocurrencies in their portfolios. The official holiday and high interest can lead to increased volatility in the crypto market during this time. The entry into ETFs indicates the optimism prevailing in the market.”

Regarding the potential effects of the Federal Reserve’s interest rate cut expectations on the cryptocurrency market, Çelik remarked, “The high sensitivity to news flows that can affect interest policies shows that we are still in an area that needs attention.”

The intersection of factors such as ETF developments, the Chinese New Year, and broader economic considerations underscores the complexity of influences on the cryptocurrency market, making it an area of continued scrutiny for investors and analysts alike.

source: aa.com.tr / prepared by Melisa Beğiç

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button