Cryptocurrency holders in Europe woke up to a happy morning. Bitcoin has broken the $24,000 resistance level and hit $24,684 on SimpleFX. Altcoins followed by Ethereum. Binance Coin is trading above $332.
What caused the recent run?
First is the inflation data. On Wednesday, the US Commerce Department released the inflation data for July. Analysts expected the inflation rate to increase. However, the CPI index stayed at 8.5%, which sparked a strong enthusiasm in the equity market. Stocks and indexes went up sharply. Cryptocurrencies are also excellent for bulls but show again that at the moment, bitcoin and altcoins aren’t an inflation hedge at all, as their price correlates with other high-risk assets. Investors are looking forward to the return of low-interest rates and cheap money.
Tuesday’s inflation data show a chance of taming inflation without stiffening the economy and risking deep inflation.
Ethereum is showing a stronger fundament for growth. The market is looking forward to the transition from poof-of-work to proof-stake. Ethereum smart contracts are also the base for some of the biggest third-party projects, the most significant stablecoin Tether, and the largest NFT (non-fungible token) markets.
Adopting proof-of-stake will revolutionize the Ethereum community. Miners will have to switch to another token, and everyday users should get access to lower transaction fees and staking accounts. Many traders chose to stake their ETH with SimpleFX Stake and Trade accounts. These funds are locked and can be used for trading. When Ethereum merges to its 2.0 version, holders can unlock these funds. Learn more here.
The final merge has been postponed several times, on September 19.
Are we in the bull market already? The bears say it’s just another pump to let big bag holders dump more of their holdings on the retail. If you believe in bitcoin long term, the current trend seems optimistic. In the shorter horizon, expect cryptocurrencies to move along with stocks. If the world’s largest economies succeed in dodging the recession, we should see a bonanza ahead. In this scenario, buying in today would be a good move. If this doesn’t happen, it may prove to be a sell-high opportunity.