A crypto market rally is going on, with altcoins like Dash, Mantle, Aster, and Morpho going up by double digits. Dash price has jumped by over 50% in the last 24 hours, while MNT, ASTER, and Morpho have risen by over 30%. Bitcoin price has also surged from last week’s low of $108,000 to $115,500 today.
Crypto market rally happens amid trade optimism
The primary reason why the crypto market rally is happening is the view that the trade war between the US and China will de-escalate soon. In a Truth Social post, Donald Trump asked market participants not to be worried about the potential trade war.
His statement came shortly after JD Vance, the vice president, left the door open for de-escalation, noting that the US had more cards over China.
These statements came two days after Donald Trump warned that the US would impose major tariffs against China. He said this after China unveiled new measures, including a threat to limit rare earth materials exports, new tariffs on US ships docking in its shores, and an investigation into Qualcomm.
In a statement on Sunday, Beijing reiterated that its actions were a response to US policy. Just recently, the Trump administration tightened the screws on its export controls policy.
Therefore, the two sides will likely work to reach a trade agreement ahead of the Trump and Xi Jinping meeting in South Korea.
Crypto investors are buying the dip
The ongoing crypto market rally is happening as investors buy the dip. This is evidenced by the ongoing volume and open interest surge. The volume in the spot market rose by 4.20% in the last 24 hours to over $262 billion.
Data compiled by CoinGlass shows that the open interest has jumped by almost 10% $162 billion, in the last 24 hours.
Historically, cryptocurrencies bounce back sharply after a big drop as market participants buy the dip expecting that the rally will intensify. They also buy the dip as they aim to recoup some of their losses.
Federal Reserve interest rate cuts hopes
Bitcoin and altcoins are going up as investors predict that the Federal Reserve will continue cutting rates as the government shutdown continues and threats to the US economy remain.
There are chances that the economy will remain under pressure in the coming weeks. For one, the Trump administration has started firing government workers as it increases its pressure on Democrats.
A recent report by ADP noted that the economy lost over 36,000 jobs in September. While the BLS did not publish the official report, analysts believe that the labor market was not all that strong. As such, the odds of more rate cuts by the Fed have jumped, which will help to support the crypto market.
Potential dead-cat bounce
The biggest risk that the crypto market faces today is that the ongoing rally may be part of a dead-cat bounce or DCB. A DCB, also known a a bull trap, is a situation where a falling asset bounces back temporarily and then resumes the downtrend.
Looking forward, the crypto market will likely be volatile as traders focus on the trade talks between the US and China, and the government shutdown.
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