Bitcoin Passes $21,000, Inspiring Market-wide Rally
Important takeaways
- Bitcoin has breached $21,000 after being below $20,000 earlier this week.
- The surge has helped the crypto market come back to life.
- The dollar’s recent decline may explain the rise.
Share this article
The recent Bitcoin rally has helped several other tokens post double-digit gains in 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 is trading at around $21,030 at press time, breaking through the crucial psychological $20,000 level it has remained trapped under 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 responsible.
In particular, Bitcoin has outperformed Ethereum to the upside despite losing ground to the second-ranked crypto asset since mid-July. After the Ethereum-Bitcoin ratio hit a 2022 high of 0.085 earlier this week, ETH has lagged behind BTC in the recent rally. ETH is currently trading at $1,723, up 6.5% today.
The top crypto leads the way despite anticipation of Ethereum’s long-awaited Proof-of-Stake “Merge” hitting a fever pitch. Bitcoin’s dominance of the global cryptocurrency market capitalization has bounced back from historical support of around 39%, suggesting further gains against Ethereum could be in the cards. According to TradingView data, BTC.D is currently 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 gainers in the last 24 hours, rising more than 22%. While Bitcoin’s rise may have sparked interest in ATOM, the upcoming ATOM 2.0 announcement is slated for Cosmoverse conference later this month may also fuel enthusiasm for the project. Among other improvements, ATOM 2.0 is planned to include adjustments to the project’s tokenomics, such as a reduction in inflation.
Other Cosmo ecosystem projects also appear to be benefiting from the market momentum. Osmosis, a decentralized exchange built using the Cosmos software developer kit, has gained 17.3%. Evmos, a blockchain that connects the Cosmos ecosystem with other Ethereum-compatible chains, is up 9.6%.
Besides Bitcoin and the Cosmos ecosystem, Layer 1 blockchains Solana and Cardano posted gains of 6.5% and 5% respectively. Even legacy crypto projects that have struggled under the weight of recent bearish macroeconomic conditions have managed to capture a bid. 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 greenback has weakened through the second half of the week. Demand for the dollar fell on Thursday after the European Central Bank’s decision to raise interest rates by 75 basis points, helping to strengthen the euro. The dollar’s move has provided relief for risky assets such as cryptocurrencies and US stocks, which may explain Bitcoin’s rapid rise.
Disclosure: At the time of writing this piece, the author owned ETH, BTC and several other cryptocurrencies.
