The crypto market rose 3.5% to $2.6 trillion on Monday, March 16, as investors returned to risk assets after rotating from traditional hedges. 

Bitcoin (BTC), the world’s leading crypto asset, rallied 4% to break above the $74,000 resistance level for the first time in over five weeks, while Ethereum (ETH) was up 6% over the past 24 hours, trading at $3,243 at press time.

Other major altcoins such as XRP (XRP), Solana (SOL), and Dogecoin (DOGE) recorded gains ranging between 4% and 5% each. Some of the top performers of the day were Pepe (PEPE), Polkadot (DOT), and Bonk (BONK), all of which brought in double-digit gains.

As prices rose, it triggered liquidations of highly leveraged traders in the crypto derivatives markets. According to data from CoinGlass, crypto liquidations mounted to $370 million, with the majority coming from short sellers who were forced to buy back their positions.

The total open interest of the market went up 8% over the last trading session, increasing liquidity across the board and providing the necessary momentum to push the market higher.

Crypto market rose as investors rotated from safe-haven assets

The crypto market surged as investors turned toward Bitcoin and other risk assets amid escalating geopolitical tensions in the Middle East that have driven crude oil prices to multi-year highs. 

Notably, oil benchmarks like Brent and West Texas Intermediate (WTI) have moved above $95 each. Iran aims to push prices as high as $200 over the coming weeks, sparking global concerns regarding runaway inflation.

Investors seem to be rotating capital from safe-haven assets like gold into cryptocurrencies, likely eyeing digital assets as a better hedge against currency debasement. Notably, the gold price has dropped back under $2,500 after hitting record peaks earlier, while silver prices have dipped by 3% over the past 24 hours.

Data from SoSoValue shows that institutional demand for crypto ETFs has also seen an uptick. U.S. Bitcoin ETFs have drawn in $1.34 billion in net inflows so far in March, while their Ethereum counterparts have experienced $180 million in inflows. In comparison, the SPDR Gold Trust (GLD) has faced consistent outflows over the last two weeks.

The crypto market rebound was a standalone event that deviated from the traditional Asian stock markets today. Notably, Chinese stock indices like the Hang Seng and Shanghai Composite dropped by over 0.70%, while Japan’s Nikkei 225 dropped by over 1.2%.

Market rose as investors bought the U.S.-Iran war news

Crypto prices also rallied today as investors appear to be buying the dip following the initial shock of the U.S.-Iran conflict.

While Bitcoin fell sharply before military actions between the two nations escalated, hitting lows near $63,000 in late February, the current rally suggests the market has already priced in the immediate risks of war.

Crypto Fear and Greed Index returns to neutral threshold

The market rebound also comes as investor sentiment seems to have improved significantly from weeks earlier. The Crypto Fear and Greed Index reading has moved back to neutral levels of 40, up from the extreme fear zone of 16 seen at the beginning of March. As of now, the neutral sentiment seems to have stabilized the floor for major assets.

Will Bitcoin price keep rising?

Looking ahead, the key drivers that will decide the near-term trajectory for the crypto market include the Federal Reserve interest rate decision scheduled for Wednesday and the ongoing progress regarding the conflict in Iran.

Economists generally expect the Federal Reserve to leave interest rates unchanged between 3.50% and 3.75% while hinting at a continued status quo as inflation remains elevated.

If the military conflict shows signs of de-escalation, we could see a sustained relief rally in digital assets. However, any hawkish commentary from the Fed regarding sticky inflation could quickly dampen the current market enthusiasm.

Meanwhile, analysts at Marex also pointed to improving spot market signals that may be supporting the current recovery.

“The Coinbase premium turning positive for the first time in 10 weeks is the kind of detail investors should pay attention to,” Marex analysts noted in a statement to crypto.news.

“It suggests that spot demand is finally returning onshore rather than the move being driven purely by leverage. When the premium flips positive, rallies tend to hold better because real money is lifting offers instead of traders simply closing short positions.”