The crypto market has seen rises and falls recently. Despite facing challenges in 2023, primarily caused by global economic conditions, the market has bounded back strongly, with most of the top-traded crypto assets demonstrating bearish trends since the beginning of 2024. The crypto market fluctuations make many investors wonder, "What causes crypto to rise and fall?" While inflation is hardly the reason for the crypto price increase, macroeconomic factors significantly impact the slump. Other factors like Bitcoin ETF approval and Bitcoin halving significantly impact the crypto market trends. 

Events shaping crypto market trends

We've witnessed several major events causing cryptocurrency growth. Analysing historical crypto market trends and price movements is crucial for traders and investors shaping their cryptocurrency portfolios. However, past performance or projections are not reliable indicators of future outcomes.

The initial crypto rally began with Bitcoin's use for transactions on Silk Road, a pioneering dark web marketplace. Early adopters' use of Bitcoin ignited the creation of other digital currencies, exchange platforms, and wallets, eventually leading to Bitcoin reaching a $1 billion market cap.

A pivotal moment in crypto history was Vitalik Buterin's development of Ethereum, which facilitated the rise of altcoins and diversified the digital asset market. This innovation led to the proliferation of initial coin offerings (ICOs) and various digital assets with multiple applications.

The global market cap of crypto-assets is $1.14 trillion, with over 100,000 different assets. These include categories like gaming (play-to-earn), move-to-earn, climate initiatives (carbon credit tokens), the Metaverse (e.g., SAND), NFTs, and Stablecoins.‍

What causes crypto to rise?

Many factors alter cryptocurrencies' growth and decline in the short and long term. By analysing the crypto assets price charts over the past decade, you will determine the major events shaping the cryptocurrency growth trajectory. Explore several of the major factors causing crypto on the rise below. 

New Technologies

If we look back at the roots of the cryptocurrency market, we will remember how everything started. In 2009, cryptography research at Bell Labs developed blockchain technology to ensure data integrity over a trustless network. Technological innovation led to the creation of Bitcoin, which started a new era in digital finance.

Between 2014 and 2016, Bitcoin adoption and the introduction of smart contracts by Vitalik Buterin drove the market from $5 billion to over $500 billion. The subsequent ICO boom, fuelled by smart contract applications and boutique token offerings, pushed the market past the trillion-dollar mark. Smart contracts allowed new projects to quickly launch tokens via ICOs, while centralised exchanges like One Trading performed due diligence before listing tokens in initial exchange offerings (IEOs) to protect customers and minimise risks.

Advancements in blockchain technology have since led to the rise of decentralised applications (dApps) and non-fungible tokens (NFTs). While technological developments can drive market growth, it's crucial to consider the role of external influences, such as media, in shaping market dynamics.

All these new technologies have boosted the popularity of cryptocurrency and the adoption of digital assets in everyday life. ‍

Market sentiments

There is no doubt that cryptocurrency is one of the most volatile markets we've ever seen. It's traditionally characterised by low liquidity and minimal regulatory control. However, the latter is gradually changing as governments and institutions get involved. How the crypto market reacts to such events can be compared to how the stock market reacts to tabloid rumours. It makes the crypto prices sensitive, bringing crypto on the rise as a reflection of market sentiment and speculation. 

A vivid example of market sentiments causing cryptocurrencies' growth is the 2017 boom when the market reached new heights due to speculative excitement and an influx of new investors. This resulted in crypto prices increasing to new heights, but they crashed significantly in 2018. The crypto rally perfectly demonstrates how sentiment can drive short-term trends.

The Terra Luna crash is another key event triggered by a loss of confidence in TerraUSD (UST) and its payment system, partly influenced by Binance's stance on the Terra stable peg token. This crash, the largest bearish trend in the crypto market by volume, highlights the risks of algorithmically pegged stablecoins like TerraUSD, which adjust their supply to maintain their price. The crash led to widespread scepticism about these types of stablecoins.

‍Bitcoin halving

Bitcoin halving is a deflationary measure written in Bitcoin's algorithm. It occurs once every four years and is characterised by reducing the block reward by half. The event has a major impact on shaping crypto market trends. By analysing the crypto market movements following every Bitcoin halving, it's easy to notice the price surge of BTC itself and many other big players in the digital assets world. ‍

Regulatory environment

Since the first cryptocurrency was introduced, regulators have tried to keep up with blockchain technology and create rules for digital assets. For example, the Chinese government's 2013 legalisation of crypto assets and Bitcoin resulted in increased investment and adoption of cryptocurrency in China. It resulted in a bullish trend in 2013 and the Mt. Gox exchange hack.

In 2016, institutional funds started flowing into the market after the New York State Department of Financial Services (NY DFS) released the BitLicense document. This helped drive a bullish trend from 2016 to 2017, but it crashed in 2018 when the US Securities and Exchange Commission (SEC) investigated ICOs.

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Long-term vs Short-term market trends

For crypto investors, understanding price trends involves considering the timeframe, which determines their investment decision and defines the duration of holding funds. The significance of the timeframe and making trading decisions is specified by the distinctions in the following crypto market trends, namely short-term and long-term price trends. 

• Long-term price trends often span months, quarters, and years. Fundamental factors such as technological innovations, macroeconomic events, adoption rates, etc., influence them. Hodlers (crypto holders opting for the long-term perspective of holding crypto assets) consider the long-term view of crypto asset prices by considering monthly to yearly views on the price chart. 
• Market events, industry news, and trading activities often shape short-term crypto price trends. Such trends are especially handy for investors seeking to capitalise on cryptocurrency investments within a short time frame, often days to weeks. The 2017 crypto boom is a vivid example of how investors capitalised on short-term crypto price trends. 

5 most popular cryptocurrencies performance

As we discuss why crypto is increasing today, this blog post should include a list of the top-performing digital assets in the modern market. All assets we list below are available for trading on StormGain, giving you leverage up to x300. 

• Bitcoin (BTC) is the undisputable leader in the crypto world. The asset's widespread adoption makes it the perfect choice for investors seeking an asset to capitalise on in the long-term timeframe. 
• Ethereum (ETH), following Bitcoin, remains the second leading crypto by market capitalisation. The digital asset's price remains relatively stable, lacking any whopping fluctuations. Ethereum remains the industry leader in the development of dApps and smart contracts. 
• USDT (Tether USD) is the leading stablecoin. With some insignificant price fluctuations, it remains the top choice for traders and investors looking for a solution to preserve capital in cryptocurrency.
• Binance Coin (BNB) coin's utility in the Binance exchange ecosystem contributes to its popularity in the crypto market. Being the fourth leading crypto coin by its market cap, BNB has experienced a minor price decline recently. However, the general crypto price sentiment remains bullish. 

What does the future hold?

Considering crypto charts, it's easy to see that crypto is on the rise today. Looking ahead, the crypto market shows strong signs of growth and opportunities. Bitcoin (BTC) and Ethereum (ETH) continue to lead the pack, and investors are optimistic about the market's future.

The recent rise in cryptocurrency prices and positive news, such as the approval of Bitcoin Spot ETFs and Bitcoin's fourth halving, have fuelled expectations for more gains. 

It's important to remember the market's volatility. Past events, like the dramatic price swings in 2021, highlight the risks of crypto investments. Investors should approach the market carefully, diversify their portfolios, and use smart risk management strategies to handle potential fluctuations.

While the crypto market's future looks promising, staying informed, adaptable, and cautious is essential for making sound investment decisions.

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