The crypto market cap is now at $2.57 trillion, fluctuating between $2.17 trillion and $2.7 trillion since March. Several macroeconomic factors influence these movements. So why are crypto prices rising?

Why Are Crypto Prices Rising?

The crypto market cap, representing the total value in the market, has reached levels not seen since late 2021. Today, Bitcoin (BTC) is trading at around $68,390, reflecting a 7% increase over the past week. This marks a 312% rise since the lows experienced in 2022 following the collapse of the FTX exchange, which had a significant negative impact on the broader industry.

The increase in crypto prices may be attributed to positive sentiment resulting from new ETF approvals.

Ethereum ETF Approvals May Cause Scarcity and Increase Demand

Recently, U.S. regulators have approved multiple ETFs for Ethereum (ETH). An Ethereum ETF, or exchange-traded fund, is an investment fund traded on stock exchanges with ETH as the underlying asset. These ETFs allow traders to speculate on the price of ETH without owning it directly.

This is significant for two reasons. First, it can substantially increase the amount of money flowing into the crypto market. Although the investors buying the ETF stocks don’t own ETH themselves, the fund they invest in needs to purchase and store large amounts of Ethereum to collateralize the ETF.

An ETF can create a supply shock, or a shortage of the underlying asset, making it scarcer and potentially more valuable.

The SEC has approved not just one ETF but eight different funds. Currently, the amount of circulating ETH being staked is just 27% compared to 63% for Solana and 65% for Cardano. If Ethereum staking increases to match competitors, the supply shock issue could become even more pronounced, potentially leading to an ETH bull run.

It’s worth noting that while BTC’s price dropped around 4% on May 28, ETH saw a 4% price increase and has risen 17% this past month and 113% over 12 months. Investors are closely monitoring the rising cryptocurrency for further developments.

Open interest for Ethereum futures on centralized exchanges also hit a record high, and Bitcoin ETF inflows are up this week, indicating overall bullish sentiment.

Interest Rates and the Halving

In April, the supply of BTC was reduced by half, an event that often precedes a BTC price increase. However, investors might have held back due to interest rates being 5.25% – 5.5%, the highest in 23 years. Higher rates offer better returns on traditional investments like bonds and yields, which might make riskier investments like Bitcoin less appealing.

The Federal Reserve recently indicated that rates are likely to remain the same for the summer. However, there are six more opportunities for the Fed to reduce rates before the year ends. Speculation that this is likely to occur may be priced into the market, boosting the price of crypto.

New data from the Consumer Price Index (CPI), used to measure inflation, will be released on June 12. This may impact the Fed’s decision, another possible factor in today’s price action.

Today’s Top Gainers: Coins on the Move

Among the top gainers in the crypto space are Notcoin (NOT) with a 26% increase in 24 hours, Celestia (TIA) up 15%, and Chiliz (CHZ) up 11%. This week, NOT also takes the top spot with a 68% rise. FLOKI is up 33% this week, and ONDO is up 30%.

As the macroeconomic situation continues to unfold, we’ll likely see more volatility throughout the crypto markets.

Stay updated with more news at Global Crypto News.

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