Analysis company Cumberland evaluated the possibility of a bull in the cryptocurrency market.
Cumberland, the crypto department of trading giant DRW, one of the largest trading firms operating in the cryptocurrency space, believes there is a “budding uptrend” in the volatile market for digital assets. In a message shared on Twitter, the company said that the uptrend is supported by the weakening of the US dollar and the adoption of cryptocurrencies by new market participants.
“Earlier this year, the dollar’s seemingly relentless rise killed sentiment across all major risk asset classes, including some severely supply-constrained commodities. The rally appears to have peaked, possibly as a result of expectations that the Fed will reverse course by mid-2023.”
The dollar has been up for most of this year, but has weakened recently as the Fed began tightening efforts to rein in inflation. Meanwhile, Bitcoin has gained 5% in the past month. This means a reversal of market dynamics earlier in the year. Another advantage for digital assets, according to Cumberland, is the reduction of geo-political disruptions such as the Russia-Ukraine conflict and supply chain bottlenecks. The company also highlighted the possibility of a more favorable environment for cryptocurrencies in Washington DC if the Republicans win in the midterm elections.
Crypto adoption among major tech companies is also a factor. For example, Instagram said last week that it will leverage the Polygon network for upcoming NFT mining on its app. Meanwhile, Google Cloud had reported it as a validator of the Solana network. The company continued its statements as follows:
“The impact of this has not been felt yet, but as we’ve seen in previous cycles, strong adoption rhetoric can lead to parabolic rallies.”