Two Factors Behind Aug 29 Crypto Market Surge and Two Upcoming Events That Could Crash It Again

On August 29, 2023, the cryptocurrency market experienced a significant surge, with Bitcoin, Ethereum, and other major cryptocurrencies seeing a substantial increase in value. However, as history has shown, rapid gains are often followed by sharp corrections.

In this in-depth analysis, we will explore the events and factors that fueled the recent crypto market rally on August 29 and the two upcoming events that could lead to a market downturn in the next two weeks.

Two Factors Behind Aug 29 Crypto Market Surge

The recent surge in the crypto market on August 29 can be attributed to two main factors:

1. First Bitcoin ETF: Grayscale Wins its Appeal Against SEC

The U.S. Court of Appeals for the D.C. Circuit’s decision in favor of Grayscale over the SEC paves the way for Bitcoin exchange-traded funds (ETFs).

A Bitcoin spot ETF would allow investors to access the cryptocurrency through traditional stock exchanges, potentially driving mainstream institutional adoption.

Bitcoin and other major cryptocurrencies surged following the court decision, while Coinbase, listed as a custodian partner in multiple spot Bitcoin ETF applications, saw a significant price increase.

Grayscale’s lawsuit against the SEC, initiated in June 2022, sought to convert its Bitcoin fund into an ETF backed by Bitcoin itself. The court’s ruling challenges the SEC’s rationale for approving some crypto-related products while rejecting others.

2. Elon Musk’s X: Closer to Crypto Payments with a New State License

On August 29, Rhode Island regulators granted Elon Musk’s X a currency transmitter license, allowing the company to conduct financial activities related to sending and receiving money, including cryptocurrencies.

X’s pursuit of financial licenses marks a significant step in Elon Musk’s vision of transforming X into an “everything app,” encompassing both fiat and crypto payments.

While X’s initial payment feature might support fiat currencies, Elon Musk’s instructions to developers suggest future crypto integration, further boosting market optimism.

Two Upcoming Events That Could Trigger A Market Crash Again

While the above two factors have contributed to the recent rally on August 29, the following two events could potentially trigger a market correction:

1. SEC to Weigh in on More Planned Bitcoin ETFs

Despite the optimism surrounding Bitcoin ETFs after Grayscale’s victory on August 29, regulatory uncertainty remains a significant concern. The SEC’s stance on crypto-related financial products remains fluid, and any unexpected regulatory actions or rejections could dampen market sentiment.

The SEC’s impending decisions on Bitcoin ETFs from BlackRock, Fidelity, Bitwise, and others are crucial moments for the cryptocurrency market. BlackRock’s application for a Bitcoin ETF that holds Bitcoin directly garnered significant attention, initiating a 240-day review process.

The crypto community eagerly awaits the SEC’s decisions on Bitcoin ETF applications from the above investment management firms. The prospect of regulatory approval for these ETFs has fueled positive sentiment.

While experts remain cautious about the speed of approvals, considering the SEC’s historical skepticism regarding crypto-related financial products, the recent ruling in favor of Grayscale Investments could also potentially accelerate the approval of various Bitcoin ETFs.

2. CPI Data and Market Sentiment

The Consumer Price Index (CPI) data for July indicated a 0.2 percent increase in the CPI and a 3.2 percent rise over the past 12 months. The index for items excluding food and energy also increased by 0.2 percent in July, with a year-over-year increase of 4.7 percent.

The August’s CPI data to be released on September 13 can again set the market into a state of volatility. If the inflation data comes out to be higher than expected, the US is likely to announce an increase in the interest rates.

This can turn out to be in favor of the US dollar but not of the crypto market. The market can again take a downturn if the interest rates are announced to be increased, which the state has already planned to do at least till December 2023.

The Link Between CPI Data and Market Volatility

The recent Consumer Price Index (CPI) data, indicating rising inflation, can influence investor sentiment. Cryptocurrencies have been considered as inflation hedges, and heightened inflation concerns could either attract or repel more investors from the crypto market because of the chance of potential hikes in the US interest rates.

Conversely, if the economic indicators from the CPI data to be released on September 13 suggest stability in the interest rate hikes, it could increase the appeal of cryptocurrencies, and the crypto market can either remain stagnant or see a minor pump on the day of release of this data.

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— Exclusively by Saad Faran, Crypto News and Web3 PR Writer!

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