Following last week’s sharp decline, the cryptocurrency market has rebounded with strong momentum. In just 24 hours, global crypto valuation jumped nearly 5%, reaching $3.58 trillion. Bitcoin climbed past $107,000, while Ethereum, Solana, and XRP saw double-digit gains. But what’s causing this sudden market comeback? Here are five key reasons driving the rally.
Trump’s $400 Billion Tariff Dividend
The biggest jump came from Donald Trump’s announcement of a massive “tariff dividend,” a $2,000 payment for Americans funded by U.S. tariff revenues. This move, expected to inject over $400 billion into the economy, immediately lifted market sentiment.
Traders believe a portion of this money could flow into risk assets, such as Bitcoin and altcoins, just as previous stimulus checks fueled rallies in 2021.
Government Shutdown Nearing Its End
Adding to the positive tone, Washington finally appears close to ending its prolonged government shutdown. A bipartisan deal reached over the weekend promises stability, avoiding layoffs and restoring key government functions.
This move removes a major risk factor and brings back the release of vital economic data on jobs and inflation, both key for market stability.
SOFR Rate Declines to Multi-Year Low
Another key reason behind this rally is the steady decline in the Secured Overnight Financing Rate (SOFR), now sitting at its lowest level in years. This rate reflects the cost of short-term borrowing among major banks.
When SOFR drops, it typically encourages investors to take on more risk, a key reason why both stocks and crypto are seeing inflows again.
Massive Short Liquidations
Bitcoin’s jump above $106K triggered massive short liquidations, forcing traders to close bearish positions and fueling a rapid market rebound. In just 24 hours, over 118,000 traders were liquidated, totaling $342 million, with the largest single order worth nearly $19 million on Hyperliquid.
Surge in Trading Volume and Open Interest
Crypto trading activity has picked up again, signaling growing investor participation. Open interest in crypto futures rose 5% in 24 hours to $148 billion, showing traders are regaining trust and re-entering the market with leverage.
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