The crypto market is up today, with the total market capitalization rising by 0.5% to rest at $2.66 trillion on March 28. In the same time,Bitcoin’s (BTC) market dominance increased by 0.1% to 51.56%, as the upcoming Bitcoin halving and bullish market structure encourage traders. 

Cryptocurrency market performance, 1-day chart. Source: Coin360

Leading the gains are Bitcoin and Ether (ETH), which have risen approximately 3% and 1.5% in the same period.

Let’s explore the reasons why the crypto market is up today.

Macroeconomic uncertainties and inflation flareups

The crypto market recovered on March 28 after comments from a member of the Federal Reserve Board, Christopher Waller, which killed the hopes of any interest rate cuts in June. Markets seem to be gearing up for no interest rate cuts in the coming months while inflation intensifies.

The CME FedWatch Tool now sees a 94.8% possibility of keeping the Fed funds rate unchanged in May, while chances of a rate cut are at 5.2%.

Target rate probabilities for May 1, 2024 Fed meeting. Source: CME

Meanwhile, the busy economic calendar for March 28 adds to the tailwinds with the increasing Continuing Claims contradicting the positive U.S. Gross Domestic Product (GDP) data. According to data from Marketwatch, the U.S. GDP reading for Q4 showed an increase from 3.2% to 3.4%. The GDP price index remains unchanged at 1.7%. While this week’s Jobless Claims remained stable at 211,000, Continuing Claims spiked to 1.819 million, down from 1.795 million the previous week.

Diverging and unclear data points leave traders nervous about the state of the economy.

Cryptomarket structure strengthens

The total crypto market capitalization has been increasing since Jan. 22, rising 81% to reach a high of $2.721 trillion on March 14. Profit-booking across the board resulted in an 18% decline in this value to $2.208 trillion. The value has now recovered and rests 6% below the 27-month peak.

This has led to a V-shaped recovery pattern on the daily chart, reinforcing the recent strong momentum in backing the rally in crypto prices. The daily relative strength index (RSI) is positioned above the mid-line at 59, suggesting that the bulls are regaining control of the market.

Total crypto market capitalization, daily chart. Source: TradingView

Euphoria around spot Bitcoin ETFs and the BTC halving boosts the crypto industry

The crypto market faces a market cycle different from previous bull runs. This can be attributed to the launch of spot Bitcoin ETFs and the upcoming Bitcoin supply halving.

On March 27, net capital flows into all the spot Bitcoin ETFs stood at $243.5 million, with BlackRock’s iShares Bitcoin ETF (IBIT) recording the highest inflow at $323.8 million. Grayscale’s converted GBTC fund saw another day of outflows totaling $300 million.

Bitcoin ETF flows table. Source: Farside Investors

The approval of spot Bitcoin ETFs in the United States has increased institutional exposure to Bitcoin, and with continued inflows into these investment products, the market remains bullish.

Market participants are also optimistic about Bitcoin’s potential upside before and after the halving event in April.

Market intelligence firm Santiment posted the following chart on X, noting that the record highs witnessed in U.S. equities and gold are “creating a #bullish divergence for $BTC and #altcoins.”

BTC price vs. S&P 500 and Gold. source: Santiment

Santiment added,

“With $ BTC’s whales accumulating big this week and the #halving just three weeks out, this increased optimism and today’s perpetual contract funding rate increase on #Binance may have some merit to predicting where #cryptocurrency goes next.”

In addition to spot BTC ETF inflows and the upcoing halving, retail investors appear to be entering the market.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.