Why is the crypto market up today?

The total crypto market capitalization is up 3.2% over the last 24 hours to rest at $3.71 trillion on Dec. 16. The overall trading volume has also jumped 27% on the day to $162 billion, reinforcing the intensity of demand-side pressure.

Bitcoin (BTC), the largest cryptocurrency by market capitalization, has risen 3.5% over the last 24 hours to trade at $81,587, just below the $106,488 all-time high set during the early Asian trading hours on Dec. 16.

Ether (ETH), the second-largest crypto, climbed 3.25% to trade around $3,976 at the time of publication.

Crypto market performance Dec. 16. Source: Coin360

Let’s look closer at the factors driving the crypto market up today.

Prospects of Bitcoin becoming US reserve asset

One of the factors contributing to the bullishness in the crypto market today is US President-elect Donald Trump’s recent comment about his intentions to build a strategic Bitcoin reserve and do “something great” with crypto.

Trump could issue an executive order on “day one” of his second term to designate Bitcoin a reserve asset status, according to Jack Mallers, founder and CEO of Strike.

“It wouldn’t be the size and scale of 1 million coins, but it would be a significant position,” Mallers said.

There are also possibilities of a third Bitcoin reserve bill at the state level, which would follow Texas and Pennsylvania’s lead, said Satoshi Action Fund CEO Dennis Porter during an X Space on Dec. 15.

Source: J64

Porter added he expects at least 10 states to introduce a Bitcoin reserve bill in total.

Meanwhile, the US Federal Reserve is expected to reduce the benchmark borrowing cost by 25 basis points to the 4.25% to 4.5% range, marking a total of 1% interest rate reduction since Sept. 18. 

Target rate possibilities for Dec. 18 Fed meeting. Source: CME Group

Market participants expect the latest core Personal Consumption Expenditures (PCE) price index reading this week, which is the Fed’s preferred measure of inflation. This reading will reveal whether the recent upticks in consumer price inflation are coincidences or signs of a genuine inflation rebound.

Nevertheless, the season is quite bullish for cryptocurrencies, and with President-elect Trump expected to foster a crypto-friendly environment, prices are expected to move even higher toward the end of the year.

Institutional demand for spot ETFs remains high

The crypto market’s ongoing gains align with the huge capital flows into the spot exchange-traded (ETF) funds.

Farside Investors reported that approximately $2.16 billion flowed into US-based spot Bitcoin ETFs over the Dec. 9 to Dec. 13 week. Approximately $0.6 billion entered these investment products on Nov. 12 alone.

Spot Bitcoin ETF flows table. Source: Farside Investors

Similarly, spot Ethereum ETFs have also experienced two weeks of continuous inflows, and they have not witnessed a single day of net outflow since Nov. 21.

They have now attracted $1.4 worth of capital over the last 14 days, taking the combined assets under management to a record high of $1.98 billion on Dec. 13.

Spot Ethereum ETF cumulative flows. Source: Farside Investors

The steady capital inflow into Bitcoin and Ethereum ETFs signals heightened institutional and retail interest in Ether.

Related: Bitcoin ‘demand shocks’ looming, Ripple stablecoin, and more: Hodler’s Digest, Dec. 8 – 14

Institutional demand is perhaps best demonstrated by continued buying by MicroStrategy, which now has a Bitcoin reserve worth over $44 billion. 

On Dec. 4, MicroStrategy CEO Michael Saylor hinted at further Bitcoin buying. In addition, Bitcoin mining giant Riot Platforms announced last Friday that it had acquired 5,117 Bitcoin at an average price of around $99,669 per BTC.

Crypto market cap nears $4 trillion

Data from Cointelegraph Markets Pro and TradingView show that TOTAL—the total market capitalization of all cryptocurrencies—has rallied more than 34% since Nov. 11. This price action has recorded a series of higher highs and higher lows, leading to the appearance of an ascending parallel channel on the daily chart as shown below.

An ascending parallel channel pattern is a chart pattern that indicates a bullish trend and is characterized by two upward-sloping parallel lines. A breakout above the channel can signal a continuation of the move higher, while a breakdown below can indicate a possible trend change. 

TOTAL/USD daily chart. Source: Cointelegraph/TradingView

The price must hold above the immediate support provided by the lower boundary of the channel at $3.57 trillion to sustain the uptrend. If this happens, TOTAL may move, first toward the middle boundary of the channel at £3.73 trillion and later to the upper boundary at $3.9.

This above the upper boundary would signal a bullish breakout from the chart pattern, with the next logical move being toward the $4.0 trillion mark. This would represent a 10.8% uptick from the current price.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.