Why is the crypto market up today?

The cryptocurrency market surged today, driven by a bullish performance from U.S. equities and heightened demand for crypto investment products. On October 15, the market saw a strong rebound as investors brushed aside mixed reactions to China’s stimulus package, while the recovery in U.S. stocks reignited optimism around “Uptober.” The total cryptocurrency market capitalization swelled by approximately 2.2% over the past 24 hours, reaching $2.3 trillion. This gain was propelled by notable increases in Bitcoin and Ether, with Bitcoin rising about 2.5% and Ether climbing 3.8%.

Risk-on Sentiment Lifts the Market

Today’s rally echoes the strength seen in U.S. equities. The S&P 500 reached a new all-time high of 5,871.41 on October 14, showing a rise of approximately 2.6% for the month so far. This underscores the significant growth in the valuation of the largest companies listed on U.S. stock exchanges.

“The S&P 500 is up +43% since October 2023 and is on track to record one of the best 12-month gains in history,” noted capital markets commentator The Kobeissi Letter in an October 14 post on X. Renewed excitement around technology and artificial intelligence (AI) contributed to this rise, with Nvidia’s stock hitting an all-time high, lifting its market cap to $3.39 trillion. This AI-driven momentum could also push tokens within the AI sector and other digital assets higher in the near future.

Eyes on the U.S. Federal Reserve

Market participants remain focused on the upcoming decision from the U.S. Federal Reserve following its two-day Federal Open Market Committee (FOMC) meeting scheduled for November 6 and 7. While the U.S. central bank is expected to continue cutting interest rates, the next rate reduction may be less aggressive than the 50 basis point cut initiated on September 18.

According to CME Group’s FedWatch Tool, the likelihood of a 0.5% rate cut at the November 7 FOMC meeting has dropped to 0%. Instead, there is an 87% probability of a 0.25% rate cut and a 13% chance that rates will remain unchanged.

Spot Bitcoin ETF Inflows Fuel Market Growth

The market’s recovery has been further supported by inflows into U.S.-based spot Bitcoin exchange-traded funds (ETFs). These ETFs recorded net inflows of $348.5 million during the week ending on October 11, with continued inflows of $555.9 million on October 14. This pushed total ETF reserves to $19.4 billion.

Additionally, data from CoinShares highlighted growing institutional interest in cryptocurrency investments, with $407 million flowing into crypto assets between October 7 and 11. This trend reflects a broader increase in bullish sentiment among traders and investors.

Accelerated Short Liquidations

The market’s upward momentum was accompanied by a sharp acceleration in short position liquidations within derivatives markets. Data from CoinGlass revealed that short traders, those betting on the market’s decline, faced $136.2 million in liquidations over the past 24 hours, compared to $46.5 million in liquidations suffered by long traders during the same period.

In particular, Bitcoin saw $53 million in liquidations, with over $46.2 million of leveraged short positions being wiped out. When short positions are liquidated, traders who expected prices to fall are forced to exit their positions at a loss, driving prices even higher as they close out their trades.

Market Structure Strengthens, Pointing to Potential Gains

From a technical lens, the overall cryptocurrency market—measured by the TOTAL market cap—currently moves within a bull flag pattern, suggesting the continuation of its upward trajectory. After a surge above $2.29 trillion on September 27, followed by a sharp correction down to $2.24 trillion, and a dip to $2.02 trillion on October 3, this flag has formed.

BTC bulls are encountering resistance at the flag’s upper boundary near the $2.23 trillion mark, which aligns with the 200-day simple moving average (SMA). A daily candlestick close above this critical threshold could indicate a breakout from the chart formation, potentially setting the stage for a rally toward the March 14 high of $2.72 trillion.

Beyond that, TOTAL could advance further, reaching the technical target of the current pattern at $2.83 trillion. This upward movement would equate to a 27% increase from current levels.