The crypto market remains in the green with strong gains over the past few weeks. General sentiment in the market is shifting as Bitcoin, Ethereum and other top 10 altcoins regain previously lost territory.
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The chances of prolonged bullish momentum appear to be increasing as macro factors impacting risky assets subside in the near term. The US Federal Reserve (Fed) has entered a period of no contact with the media, and dollar inflation looks set to decline.
This metric as measured by the Consumer Price Index (CPI) sits at its highest level in 40 years and will dip in its July print according to data provided by the Bank of America. The banking institution surveyed the market and determined investors ‘really expect inflation to come down’ over the next two years.
Moreover, as economist Alex Krüger put it, US equity indices are trending higher with “remarkably strong” technicals. The Nasdaq 100 and S&P 500 broke out in long ascending triangles, suggesting a recovery from previous highs.
The Nasdaq 100 is currently trading at 12,343 with strong gains since early July. Krüger believes this index could return to its April 2022 levels, which would represent a significant uptrend. The Economist said via Twitter:
Given no surprises from the Fed until September’s FOMC (expect July not to be an event) and assuming there are no major negative developments on the European front, a summer rally taking prices there makes sense to me.
These three factors, the absence of the Fed, a potential drop in inflation and a rally in US equities, constitute the best scenario in the current macroeconomic conditions. The crypto market has shown a strong correlation with the Nasdaq 100 and could benefit from a summer rally.
Bitcoin, Ethereum and other cryptocurrencies are already breaking through critical resistance levels. ETH price leads the market rally with a 50% profit last week and BTC price follows with a 23% profit.
What Could Hinder a Crypto Summer Rally?
According to Krüger, US equities must stay in the green this earnings season. Stock indices reacted well to Netflix earnings reports, but reports from Tesla and Apple could really define this period as a win or comeback in the crypto market.
If the price of BTC and ETH can extend its current uptrend, the next major hurdle could come from the Fed and its September meeting of the Federal Open Market Committee (FOMC). Kruger added:
After next week and ahead of the September FOMC (September 22), the main things to watch will be CPI inflation data, UMich inflation expectations and payrolls, with the key event being the CPI of September (September 13). Mark calendars with these two dates.