Recently, the price of Bitcoin once dipped to around $59,000 on October 10, but then began to rise. Just 5 days later, on October 15, the price of Bitcoin had risen to around $68,000. Not only that, many Altcoins have also started a major rally, such as the price of SUI, which has risen by more than 30% in just a few days, and some MEME coins have even risen by more than 50%.
While the bull market is certainly pleasing, the crypto market is currently facing certain risks, which makes one wonder whether the recent sudden surge can be sustained, and whether a crash will follow the surge.
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ToggleThe rise in Bitcoin price is not primarily due to rate cuts
After reaching a low of $59,000 on October 10, the Bitcoin price began to rebound. However, it is puzzling that this rally does not seem to be driven by any clear reason. After all, the Federal Reserve had recently suggested that the previous 50-basis-point rate cut may have been a mistake. There are even traders in the financial market betting that the Fed will not continue to cut rates at its next meeting. It seems that the market currently believes that only rate cuts by the Fed can provide more liquidity to the market and trigger a rally.
However, investors should note that from the end of last year to the beginning of this year, the Fed did not cut rates, but Bitcoin still rose from around $20k to around $60k in the high-interest environment. This is because injecting liquidity into the market does not necessarily have to be done through rate cuts. For example, the Japanese yen is in a low-interest-rate environment, while the US dollar is in a high-interest-rate environment, and the large interest rate differential between the two is a major factor driving the Bitcoin bull market at the beginning of this year.
Therefore, rate cuts may not necessarily bring a lot of liquidity in the short term, and the large interest rate differential between the US dollar and the Japanese yen is the real source of current liquidity. If the USD/JPY exchange rate rises, indicating a widening of the interest rate differential, it will be more favorable for the financial market. USD/JPY touched around 140 on September 18 and has since rebounded, now approaching 150. This also explains the overall rebound in the crypto market recently.
As for rate cuts, they can naturally bring more liquidity, but unless the Fed launches another large-scale rate cut like in the 2021 pandemic, the short-term effect of rate cuts will certainly be not obvious. Moreover, rate cuts will lead to a narrowing of the interest rate differential between the US dollar and the Japanese yen, which may even affect the upward trend of the financial market. Therefore, unless there is a large-scale rate cut, investors do not need to attach too much importance to rate cuts in the short term.
Altcoin rally, or the final bull market in 2024
After Bitcoin led the way, many Altcoins have also seen a long-awaited rally. For example, the previously controversial Ethereum, whose price has rebounded from around $2,400 to around $2,600, indicating that Ethereum's fundamentals have not deteriorated to the point of losing market recognition, and it can still see some upside when the market rallies.
In addition, the prices of the public chain SUI and Aptos have also seen good gains recently. The main narrative behind these two is that they are "Solana replacements". While their recent gains have been impressive, investors need to be aware of the potential risks. The "Solana replacement" narrative itself determines that this is not a track that can be traded in the long term. On the one hand, Solana itself has not shown any major flaws or controversies. On the other hand, Solana's own ecosystem is much more mature and cannot be compared to the ecosystems of SUI and Aptos. According to a market report by Wintermute, Solana is currently dominating token generation, with its market share rising from 60% in early September to 86%, and its weekly token generation volume surging from 45,000 to 110,000. This shows that the market has an extremely high recognition of Solana, so the necessity of replacing Solana is questionable. Therefore, SUI and Aptos may only be suitable for short-term trading, and their long-term investment value has not yet emerged.
About BingX
BingX, founded in 2018, is a leading global cryptocurrency exchange that provides a diverse range of products and services, including spot, derivatives, copy trading, and asset management, to over 10 million users worldwide. BingX also regularly provides price analysis tools for mainstream cryptocurrencies such as Bitcoin and Ethereum to meet the needs of users from beginners to professionals. BingX is committed to providing a trustworthy platform and empowering users with innovative tools and features to enhance their trading capabilities. In 2024, BingX proudly became the main partner of Chelsea Football Club, marking its exciting debut in the sports world.
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