Why Crypto Market is Up Today? Analyst Reveals Top Reasons

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The total crypto market cap edged 1.4 percent higher on Friday to stand around $1.19 trillion. Bitcoin and Ethereum lead the rest of the altcoin market in gains, up approximately 2 percent to trade around $27,182, and $1,894 respectively during the early Asian market on Friday. The sudden price reversal in the crypto market coincided with a significant drop in the United States Dollar Index, a measure of the value of the United States dollar relative to a basket of foreign currencies, in the past 24 hours.

The U.S Dollar Index suddenly reversed on Thursday after being on a rising trajectory in the past three weeks. Notably, a weakening United States dollar is an added advantage to Bitcoin and the rest of the digital assets.

Analyst Take on Bitcoin and Crypto Market Outlook

According to Bob Baxley, Chief Technology Officer of DeFi infrastructure platform Maverick Protocol, the crypto markets may have to reckon with the U.S. Treasury’s state of its general account, which shrunk significantly in the past few months. In this regard, Baxley noted that the crypto liquidity could significantly reduce as the U.S. treasury tries to reload its general account.

“The risk here is that the roughly trillion dollars flowing back into the general account could suck a tremendous amount of liquidity out of the market,” Baxley noted. “Something like this happened in 2019, and the strain placed on the market basically compelled the Federal Reserve to step in and add emergency liquidity to prevent a full-blown crisis. So, in short, just because a deal has been reached doesn’t mean we are out of the woods yet.”