Why is the crypto market up today?

The cryptocurrency market is up today with its net valuation reaching $1.427 trillion for the first time since May 2022.

Bitcoin (BTC), which controls more than half of the market share, contributed the most to the crypto sector’s growth on Dec. 1, rising 3.25% to nearly $38,850. Ether (ETH), the second-largest cryptocurrency by market cap, jumped 2.8% over $2,100. 

Why is crypto market going up today?

Crypto market gains in the last 24 hours coincide with MicroStrategy’s announcement that it had purchased nearly $600 million worth of Bitcoin at an average price of $36,785 per BTC. This acquisition brings the company’s total BTC holdings to over $6 billion.

Interestingly, MicroStrategy’s BTC investment comes a month ahead of the U.S. Securities and Exchange Commission’s potential approval of all Bitcoin exchange-traded fund (ETF) applications. The move reflects the firm’s confident upside bias for the Bitcoin market, which, in turn, has benefited the overall crypto market on Dec. 1.

When people ask if there is demand for a spot Bitcoin ETF just take a look at purchases like Microstrategy today with the $500mm+ ticket.

Microstrategy is effectively used as a publicly traded Bitcoin ETF proxy. Once spot ETFs are approved, Bitcoin inflows will grow even more.

— Gabor Gurbacs (@gaborgurbacs) November 30, 2023

Massive crypto withdrawals from exchanges

The crypto market’s gains in the past 24 hours follow a period of withdrawals from crypto exchanges.

For instance, nearly $1.28 billion worth of Bitcoin has left crypto exchanges in the last two weeks, according to CryptoQuant.

A lowering Bitcoin balance across crypto exchanges has largely coincided with rising prices. That signals traders taking custody of their Bitcoin holdings while depleting selling pressure in the market.

Fed’s rate pause potential

Moreover, the crypto market’s gains in the past 24 hours coincide with anticipations about the Federal Reserve’s pause in interest rate hikes.

Fed Chairman Jerome Powell will speak at two events on Friday. Investors are closely monitoring these events for hints of a potential pause in interest rate hikes, with the latest economic data showing diminishing inflation.

Why do we care when Jerome Powell talks?

People often ask me why markets are so volatile when the Federal Reserve Chairman speaks. Volatility is often experienced during his speeches as traders attempt to decipher interest rate clues.

Why do traders care? As head of the… pic.twitter.com/Uw5oS3kp6p

— MartyParty (@martypartymusic) December 1, 2023

A pause in interest rate risks reducing U.S. Treasury yields, which, in turn, boosts investors’ appetite for non-yielding risky assets like stocks and Bitcoin.

Will crypto market boom in December 2023?

From a technical perspective, crypto market looks prepared to undergo further gains in December 2023. 

Related: Bitcoin ETFs, user experience will drive adoption — eToro CEO

Notably, the market has formed an ascending triangle pattern, which technical analysts consider a bullish continuation pattern in an uptrend. Therefore, the combined valuation of all cryptocurrencies can rise toward $1.5 trillion if it breaks above the triangle’s upper trendline in December 2023.

Conversely, a break below the triangle’s lower trendline risks invalidating the bullish continuation setup, with the 50-day exponential moving average (50-day EMA; the red wave) near $1.29 trillion serving as the primary downside target in December 2023.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.