By Chris Hollingworth 
The cryptocurrency market experienced a positive uptick, with the total market capitalization increasing by approximately 3.2% within the last 24 hours, reaching $2.8 trillion on March 20. The notable gains were primarily driven by the leading cryptocurrencies, Bitcoin (BTC) and Ether (ETH), which saw respective increases of around 3% and 4%.
One of the key factors contributing to the rebound in the crypto market is the prevailing risk-on sentiment, which mirrors the gains observed in US equities subsequent to the Federal Reserve’s decision to maintain unchanged interest rates. Notably, the S&P 500 and the Nasdaq exhibited gains of 1.08% and 1.4%, respectively, during the late New York trading session on March 19. This positive momentum extended to crypto-related stocks, with notable increases seen in crypto exchange Coinbase (COIN) and Strategy (MSTR).
The US Dollar Index (DXY) remains at its lowest levels since early November, registering a decline of more than 6.04% from its peak on Jan. 13. The Federal Open Market Committee (FOMC) meeting confirmed the decision to retain interest rates at 4.25%-4.50%, aligning with market expectations. The committee’s projection of two rate cuts by the year-end has led to increased odds of a 0.25% cut in May and a higher probability of a cut in June, as per CME Group’s FedWatch Tool data.
The anticipation of potential rate cuts has renewed trader interest in risk assets, including cryptocurrencies. Additionally, speculation surrounding a forthcoming update to US cryptocurrency policy has further bolstered market sentiment. President Donald Trump’s scheduled appearance at Blockworks’ Digital Asset Summit in New York City on March 20 has fueled expectations of significant policy updates, following the establishment of the national crypto reserve on March 6.
Trump’s recent affirmations of a Strategic Bitcoin Reserve and his favorable stance towards cryptocurrencies have generated excitement among investors. Institutional enthusiasm for a potentially crypto-friendly regulatory environment is evident in the record Bitcoin ETF inflows post-election, surpassing $3.4 billion weekly. Bitcoin’s price surge above $100,000 and subsequent all-time high above $109,000 reflect this optimism.
With the dovish stance adopted by the Fed and positive market sentiment, Bitcoin’s price has rebounded above $85,000. BitMEX co-founder Arthur Hayes suggests that the quantitative tightening (QT) phase would conclude on April 1, shifting focus to potential SLR exemption or the resumption of QE policies. Hayes speculates that $77,000 marked the probable bottom for Bitcoin.
Technical analysis of the crypto market indicates that the recent gains are part of a broader rebound that commenced subsequent to a price decline to a multi-month low. The positive market momentum, coupled with evolving policy dynamics and macroeconomic factors, continues to shape the trajectory of the cryptocurrency market in the current landscape.
