The central theses
- Bitcoin broke through $21,000 after trading below $20,000 earlier this week.
- The surge has helped the crypto market come back to life.
- The dollar’s recent drop may explain the rally.
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The recent Bitcoin rally has helped several other tokens post double-digit gains over the past 24 hours.
Bitcoin bounces back
Bitcoin is showing strength again for the first time in weeks.
According to CoinGecko data, the top cryptocurrency is up 10.1% on the day. It is trading around $21,030 at press time, breaking the crucial $20,000 psychological level it has been trapped below since the start of the week. While there is no clear catalyst behind Bitcoin’s bullish move, a falling dollar and rising stocks could be to blame.
Notably, Bitcoin has overtaken Ethereum on the upside, although it has lost ground against the second-tier crypto-asset since mid-July. After Ethereum/Bitcoin ratio hit a 2022 high of 0.085 earlier this week, ETH has lagged BTC in the recent surge. ETH is currently trading at $1,723, up 6.5% today.
The top crypto is leading the way despite expectations that the much-anticipated Ethereum proof-of-stake “merge” will hit a boiling point. Bitcoin’s dominance over the global cryptocurrency market cap has recovered from historical support at around 39%, suggesting that further gains against Ethereum could be on the horizon. According to TradingView data, BTC.D is currently trading at just over 40%.
BTC.D Chart (Source: TradingView)
Bitcoin’s demonstration of strength appears to have sparked a rally in the broader market. Cosmos’ ATOM token is one of the biggest gainers over the past 24 hours, up more than 22%. While Bitcoin’s surge may have sparked interest in ATOM, the upcoming ATOM 2.0 announcement is scheduled for that Cosmoverse Conference later this month could also fuel enthusiasm for the project. Among other improvements, ATOM 2.0 is said to include adjustments to the project’s tokenomics, such as B. a reduction in inflation.
Other Cosmos ecosystem projects also appear to be benefiting from the market stimulus. Osmosis, a decentralized exchange built using the Cosmos Software Developer Kit, is up 17.3%. Evmos, a blockchain connecting the Cosmos ecosystem to other Ethereum-compatible chains, is up 9.6%.
Alongside Bitcoin and the Cosmos ecosystem, Layer 1 blockchains Solana and Cardano have seen gains of 6.5% and 5%, respectively. Even older crypto projects that have struggled under the weight of recent bearish macroeconomic conditions have managed to secure an offer. Filecoin and Zcash, for example, have both posted double-digit gains.
The Dollar Currency Index hit a local high of 110.7 on Wednesday, although the dollar weakened in the second half of the week. Demand for the greenback fell on Thursday after the European Central Bank’s decision to hike interest rates by 75 basis points, helping to support the euro. The dollar’s decline has brought relief to risky assets like cryptocurrencies and US stocks, which could explain Bitcoin’s rapid rise.
Disclosure: At the time of writing this article, the author owned ETH, BTC, and several other cryptocurrencies.
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