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Crypto Market Cap Back to $2 Trillion: What’s Driving Revival

Last Updated February 28, 2024 1:19 PM
Shraddha Sharma
Last Updated February 28, 2024 1:19 PM
By Shraddha Sharma
Verified by Peter Henn

Key Takeaways

  • The US government suspends crypto mining’s energy use survey.
  • A pre-halving rally signals a strong start to a new Bitcoin cycle.
  • Increased inflows from spot Bitcoin ETFs fuel market investment.
  • Can the cryptocurrency market cap return to $3 trillion soon?

The cumulative cryptocurrency market capitalization has surged beyond a $2 trillion valuation after weeks of strong investor interest.

After reaching a historic $3 trillion market cap in November 2021, the crypto market is hoping to witness the next level soon. But what is driving the Bitcoin and broader crypto rally?

Prices Positive on Regulatory Decisions

Fox News reported  that Washington is concerned about Bitcoin (BTC) mining putting pressure on the power grid. However, reports reveal that the US government will have to halt its cryptocurrency mining crackdown for now. A Texas federal judge has, reportedly , issued a temporary order to block the government’s mining survey. The decision came after a lawsuit claimed such operations were exacerbating the climate crisis.  

 The decision has brought back some confidence that the US Department of Energy’s crackdown under the “emergency” initiative would take a pause.

At the time of writing, the total trading volume based on CoinGecko data stands at $247 billion. Meanwhile, the capitalization rally is driven by Bitcoin, which leads the market with a 50% dominance, followed by Ethereum at 17.3%.

Push by Pre-Halving Rally

The cryptocurrency market is witnessing a significant pre-halving rally before the April event. Analysts highlight this as the most substantial start to a new cycle, indicating a potential shift in market dynamics.

According to crypto analyst Jelle on Twitter, “we’re in for a new regime.”

Rekt Capital also reminds us that, historically, halving has been a precursor to market rallies. As per their analysis, “the Pre-Halving Rally tends to begin approximately 63 days before the Bitcoin Halving”.

However, short-term speculators might be behind this rally to “buy the hype”.

Increased Inflows Another Positive

Investment inflows have surged, with companies like MicroStrategy adding large Bitcoin holdings, now valued close to $11 billion.

Meanwhile, the interest in Bitcoin ETFs, in addition to purchases by institutional investors, is another plus, as revealed by inflow charts since the funds’ January debut.

However, JP Morgan analysts told  a paper recently back the market rally is driven by individual traders, reportedly calling it ‘retail impulse.’

Is $3 Trillion Crypto Market Cap Hitting Soon?

February is largely responsible for the strong market performance we are seeing in 2024. The cryptocurrency market’s return to a $2 trillion, leaves room for a next peak of $3 trillion.

Regulatory decisions, market anticipation, investment inflows, and retail participation should drive it. As we move closer to events like the Bitcoin halving, the market’s response is expected to remain positive.

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