Why Crypto Could See Summer Rally With Support From U.S. Equities

The cryptocurrency market remains in the green with significant gains over the past weeks. The general sentiment in the market is changing as Bitcoin, Ethereum and other top 10 digital currencies regain previously lost ground.

Related reading | Why Bitcoin must surpass $25,500 to establish a bullish rally

Chances of an extended bullish momentum appear to be increasing as the macroeconomic factors affecting risk assets are declining in short time frames. The US Federal Reserve (Fed) has started a media outage period, and dollar inflation looks set to decline.

This metric measured by the Consumer Price Index (CPI) stands at a 40-year high and will decline in its July edition according to data provided by the Bank of America. The banking institution surveyed the market and Determined investors ‘really expect low inflation’ over the next two years.

Additionally, as stated by economist Alex Krueger, US stock indices are heading to the upside with a “remarkably strong” technical presence. The NASDAQ 100 and S&P 500 have broken out of their long ascending triangles indicating a resumption of previous highs.

The Nasdaq 100 is currently trading at 12343 with significant gains since the beginning of July. Krueger believes that this indicator could return to its levels in April 2022 which could represent an important upward trend. Economist He said Via Twitter:

Given the absence of Fed surprises until the September FOMC meeting (we expect July not an event) and assuming there are no major negative developments on the European front, it makes sense for me to have a summer rush with prices higher there.

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source: Nasdaq 100 Index on TradingView via Alex Krueger

These three factors, the absence of the Federal Reserve, the possible decline in inflation, and the rise in US stocks, are the best case scenario in the current macroeconomic conditions. The cryptocurrency market showed a tight correlation with the Nasdaq 100 index and could benefit from the summer rally.

Bitcoin, Ethereum and other cryptocurrencies are already crossing critical resistance levels. ETH price is leading the market recovery with a 50% gain in the past week and BTC price followed by a 23% gain.

What could stand in the way of a cryptocurrency summer rally?

According to Krueger, US stocks should remain in the green during this earnings season. Stock indices were reacting well to earnings reports from Netflix, but reports from Tesla and Apple could really define this period as a win or a bounce for the crypto market.

Related reading | Solana and Avalanche brace for gains as Crypto market enjoys fresh tailwinds

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ETH price with significant gains on the 4 hour chart. source: ETHUSDT TradingView

If the price of BTC and ETH can extend their current uptrend, the next major hurdle may come from the Federal Reserve and the Federal Open Market Committee (FOMC) meeting in September. Krueger added:

After next week and before the September FOMC meeting (September 22), the main things to watch will be CPI inflation data, UMich inflation forecasts and payrolls, the main event being September CPI (September/13) . Mark the two calendars with these dates.

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