Last week (10/16-10/22), the cryptocurrency market continued its rebound trend with a widespread increase in prices.

The total market capitalization showed a continuous upward trend, rising from $1.06 trillion to a peak of $1.14 trillion, an increase of 7.55%.

The market sentiment index also saw a significant increase, rising from 46 to 54, shifting from fear to neutrality.

Crypto total market capitalization (yellow) and Fear Greed Index (blue) trend from January 1, 2023, to October 22, 2023; Source: MacroMicro.

Along with the market recovery, major cryptocurrencies experienced varying degrees of price increases. Chainlink (LINK) performed the strongest, rising by 34%, while Solana (SOL) also showed strong performance with a 21% increase.

Platform coins, on the other hand, had mixed results. Binance Coin (BNB) only rose by 1%, while OKEx Coin (OKB) remained unchanged with a 0% change.

 Performance of major cryptocurrencies from October 16, 2023, to October 22, 2023; Source: MacroMicro.

Additionally, Bitcoin (BTC) price increased by 5%, and its market dominance grew by 0.9% to reach 51.2%. Ethereum (ETH) price increased by 4%, but its market share decreased by 0.2% to maintain 17.5%.

According to CME's "FedWatch," as of October 23rd, the probability of the Federal Reserve keeping interest rates unchanged in November and maintaining the range of 5.25%-5.50% reached 98.4%. The probability of a 25-basis point rate cut to 5.00%-5.25% was only 1.6%. This indicates that the market still favors the current high-interest-rate level.

Expected interest rates by the Federal Reserve in November 2023; Source: CME Group.

If there is no rate hike in November, it will be the third month of 2023 without an interest rate increase. Let's review the overall interest rate situation in 2023.

Looking at the Fed's interest rate table for 2023, the emphasis this year has been on moderate rate hikes with four 25-basis point increases and three unchanged rates. There have been no rate cuts, resulting in an overall upward trend in interest rates from 4.50%-4.75% to 5.25%-5.50%, a total increase of 100 basis points.

Federal Reserve's Interest Rate Decision for 2023, Source: Compiled by Mitrade.

Under the backdrop of interest rate hikes, the cryptocurrency market capitalization continues to fluctuate upwards. Despite the unfavorable monetary policy environment, how has the cryptocurrency market changed?

Data shows that on January 1st, 2023, the total cryptocurrency market capitalization dropped to $0.80 trillion but rebounded afterwards. By the end of January, the total market capitalization surpassed $1 trillion again.

Trend in Crypto Total Market Capitalization from January 2022 to October 2023; Source: MacroMicro.

Since then, the total market capitalization has remained between $1 trillion and $1.3 trillion. During this period, there were three challenges to break below the $1 trillion mark, with the first one falling below but subsequently reclaiming it, while the next two did not break below.

Similarly, the total market capitalization has made two attempts to surpass the $1.3 trillion mark but failed to break through. Currently, the total market capitalization is at $1.14 trillion, hovering around the midline of the range, potentially setting up for the third attempt. Whether it will reach the $1.3 trillion mark depends on the performance of BTC.

Trend in Crypto Total Market Capitalization from January 2023 to October 2023; Source: MacroMicro.

Previously, it was mentioned multiple times that Bitcoin would experience a third rally to $31,000. Currently, it can be confirmed that this has been achieved.

On October 19th, there was a false report about a Bitcoin spot ETF approval, which stimulated a sharp increase in BTC's price with a large bullish candlestick. After the rumors were clarified, the BTC price quickly fell back. However, after two days of adjustment, the BTC price continued to rise, experiencing a four-day consecutive uptrend, reaching a high of $30,980. So, can BTC break through the resistance level?

Bitcoin Daily Price Chart, Source: TradingView.

I don't know if everyone noticed, but this time, although there was an upward trend, platform coins like BNB and OKB did not follow the upward movement; instead, they experienced a decline. What does this imply?

In fact, platform coins in the crypto market are similar to brokerage stocks in the stock market. Their performance often foreshadows the market's bull or bear trends. Generally, a sustained uptrend indicates the arrival of a true bull market. 

If there is a decline or lack of movement, it suggests that the bull market has not yet arrived and the market is still in a bearish phase. Based on this, it is inferred that this recent increase is not a result of the bull market but rather a short-term stimulus from the expected Bitcoin spot ETF, thus lacking sustainability.

Bitcoin/USDT Daily Price Chart, Source: TradingView.

Furthermore, this year, the monetary policy in the United States leans towards raising or maintaining interest rates at a relatively high level, which is unfavorable for funds entering the risk market. At the same time, the cryptocurrency market is struggling to attract significant new inflows of capital. 

Additionally, looking at the cryptocurrency cycle, it is likely that the post-halving hotspot will enter the speculative stage next year, and the market currently lacks catalysts and sentiment. Therefore, based on these three points, it is believed that BTC lacks the driving force to break through the upward trend this year.

Of course, under the current bullish momentum, it cannot be ruled out that BTC will experience a temporary false breakthrough, followed by a decline back into the range below $31,000. The entire cryptocurrency market will be correlated with BTC's trend, but the intensity will be weaker than BTC.