The crypto market rally gained steam on Monday morning, with the total valuation of all tokens jumping by nearly 5% to $4.57 trillion. Bitcoin remained above $105,000, while top coins like PUMP, Virtuals Protocol, Zcash, and Aerodrome Finance were up by over 15%.
Crypto market rally happening as government shutdown nears end
The main reason why the government shutdown is happening is that the longest government shutdown is nearing its end after some moderate senators reached a deal on Sunday.
The proposed deal seems like a victory to Donald Trump and the Republicans, who have largely achieved most things they wanted, such as ending Obamacare subsidies. Democrats main victory was a commitment for no federal employees layoffs through January next year.
Ending the government shutdown is a good thing for the crypto market as it removes one of the biggest risks in the market. It also means that the US will start releasing key macro data on areas like the labor market and inflation soon.
These numbers are important as they help to complement those published by the private sector, which the Federal Reserve and other economists have been relying on in the past few months.
Crypto market going up as SOFR rate slips
Another key reason why the crypto market rally is happening is that the Secured Overnight Financing Rate (SOFR) has continued moving downwards, and is now at the lowest level in years.
The SOFR is an important interest rate that companies like banks pay for overnight financing. It is collateralized by the US treasury in the repurchase or repo market. Analysts believe that the SOFR rate is often more important than the headline interest rate that the Fed cuts or raises.
A falling SOFR rate boosts the stock and crypto markets by lowering the cost of borrowing, which leads to a risk-on sentiment among investors.
Demand for privacy tokens rising
The other main catalyst for the ongoing crypto market rally is happening is that demand for privacy tokens is soaring.
Data compiled by CoinMarketCap shows that privacy tokens are leading the ongoing surge in the crypto market industry.
Zcash price has jumped from below $50 in October to $650 today, making it the 12th biggest token in the crypto industry. Dash price jumped by 14% in the last 24 hours, while other tokens like Monero, Horizen, and Decred have maintained their bull run.
Rising volume and open interest
The crypto market rally is also happening as volume and futures open interest gains steam. Data shows that open interest in the crypto industry jumped by 5.22% in the last 24 hours to $148 billion, a sign that investors are starting to deploy leverage into the industry.
There are signs that the funding rate has bottomed after plunging sharply last month when over 1.6 million traders were liquidated. The volume in the spot market has also jumped in to past few days, moving to $270 billion in the last 24 hours.
Upcoming crypto earnings
The crypto market rally is happening ahead of the upcoming earnings by some of the biggest companies in the crypto industry.
Gemini Space Station, the crypto exchange backed by the Winklevoss Twins, will be the first crypto exchange to publish it numbers this week.
The other top companies to watch will be TeraWulf and Circle. TeraWulf is a $5 billion company that mines Bitcoin and is now pivoting to the AI data center space.
Circle, on the other hand, is the company behind USDC, the second-biggest company in the stablecoin industry after Tether.
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