Bitcoin has broken $21,000 after sitting below $20,000 earlier this week. The surge has helped the crypto market bounce back to life. The dollar’s recent decline may explain the rally.
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The latest Bitcoin rally has helped several other tokens post double-digit gains over the past 24 hours.
Bitcoin Bounces Back
Bitcoin is showing strength for the first time in weeks.
According to CoinGecko data, the top cryptocurrency has risen 10.1% on the day. It’s trading at about $21,030 at press time breaking through the crucial psychological $20,000 level it has remained trapped beneath since the start of the week. Although there’s no clear catalyst behind Bitcoin’s bullish move, a declining dollar and rising equities may be responsible.
Notably, Bitcoin has outpaced Ethereum to the upside despite losing ground to the second-ranked crypto asset since mid-July. After the Ethereum to Bitcoin ratio reached a 2022 high of 0.085 earlier this week, ETH has lagged behind BTC in the recent surge. ETH is currently trading at $1,723, up 6.5% today.
The top crypto is leading the way despite anticipation for Ethereum’s highly-anticipated “Merge” to Proof-of-Stake hitting a fever pitch. Bitcoin’s dominance over the global cryptocurrency market capitalization has rebounded from historical support at around 39%, hinting that further gains against Ethereum could be in the cards. According to TradingView data, BTC.D currently sits at just over 40%.
Bitcoin’s show of strength appears to have inspired a rally across the broader market. Cosmos’ ATOM token is one of the biggest winners over the last 24 hours, rising more than 22%. While Bitcoin’s surge may have sparked interest in ATOM, the upcoming ATOM 2.0 announcement scheduled for the Cosmoverse conference later this month could also be fueling enthusiasm for the project. Among other improvements, ATOM 2.0 is slated to include adjustments to the project’s tokenomics, such as a reduction in inflation.
Other Cosmos ecosystem projects also appear to be benefitting from the market impulse. Osmosis, a decentralized exchange built using the Cosmos software developer kit, has gained 17.3%. Evmos, a blockchain that links the Cosmos ecosystem with other Ethereum-compatible chains, is up 9.6%.
Besides Bitcoin and the Cosmos ecosystem, Layer 1 blockchains Solana and Cardano have respectively put in gains of 6.5% and 5%. Even older crypto projects that have struggled under the weight of recent bearish macroeconomic conditions have managed to catch a bid. Filecoin and Zcash, for instance, have both posted double-digit gains.
The Dollar Currency Index hit a local high of 110.7 Wednesday, although the dollar has weakened throughout the second half of the week. Demand for the greenback decreased Thursday following the European Central Bank’s decision to raise interest rates by 75 basis points, helping shore up the euro. The dollar’s drawdown has provided relief for risk-on assets like cryptocurrencies and US equities, which may explain Bitcoin’s rapid surge.
Disclosure: At the time of writing this piece, the author owned ETH, BTC, and several other cryptocurrencies.
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