The cryptocurrency market is bullish today as Bitcoin (BTC), Ether (ETH), XRP (XRP), Cardano (ADA) and many altcoins are on the rise after a US District Court judge ruled that XRP is not a security.
On July 13, XRP led the price rally, hitting a one-year high of $0.93 and gaining more than 75% on the day. The price of Bitcoin broke a one-year high of $31,800, while XRP-like Stellar (XLM) surged more than 67% to a 9-month high of around $0.19.
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Let's take a look at the three main factors driving today's rally in the cryptocurrency market.
The doomsday of cryptocurrency is approaching
Today's rally sparked a wave of short liquidations across the market totaling more than $180 million in 24 hours. Short liquidation of XRP led the BitMex exchange with the largest single liquidation at $2.8 million. In just 24 hours, $27.3 million worth of XRP shorts were liquidated.
The US dollar index (DXY) continues to cool
Another positive price sign in the cryptocurrency market is the fall in the US dollar index (DXY). Historically, when the DXY index declines, sentiment toward riskier assets such as Bitcoin rises.
The DXY could cool further after CPI data showed the slowest growth in the 12 months to March 2021. In an ideal world, investors would ideally see the decline in DXY as an opportunity to boost sentiment towards riskier assets like cryptocurrencies.
The decline in DXY coincides with the rebound in Bitcoin and altcoins. Historically, Bitcoin prices and cryptocurrency markets have followed DXY freezes in opposite directions.
Bitcoin ETF Buzz
Earlier speculation about the possible approval of the first US bitcoin ETF helped the cryptocurrency market, but hopes faded a bit after a flurry of applications in early July. Some analysts believe that Ripple Labs' recent victory over the SEC could make it more difficult for chairman Gary Gensler to cancel the current round of filings for the bitcoin ETF.
Mike Novogratz, founder of Galaxy Digital, believes that the approval of the Bitcoin ETF will effectively be a government stamp of approval for Bitcoin.
Related: Why is the price of XRP rising today?
While Bitcoin and altcoins still experience risky events that can affect the price, the Bitcoin Fear and Lust Index shows that investors are more receptive to risk assets.
Overall, price volatility in the cryptocurrency market is likely to persist. The positive news of Ripple Labs' victory at the SEC leads to a short-term rise in cryptocurrency prices, but the market's reaction to new enforcement measures or an economic slowdown will be the real factor in determining where the market is headed.
This article does not contain investment advice or recommendations. Every investment and trading activity involves risk and readers should do their own research when making decisions. 