The cryptocurrency market experienced a strong rebound on March 20, with total market capitalisation rising by approximately 3.2% in the last 24 hours to reach $2.8 trillion. The rally was led by Bitcoin (BTC) and Ether (ETH), which gained around 3% and 4%, respectively. The surge comes amid a broader market rally, following the Federal Reserve’s decision to leave interest rates unchanged while signalling potential rate cuts later this year.

Fed’s Dovish Stance Sparks Risk-On Sentiment

The crypto market’s recovery closely follows gains in US equities. The S&P 500 rose by 1.08%, while the Nasdaq gained 1.4% during late New York trading on March 19. Stocks related to the crypto sector also saw a boost, with Coinbase (COIN) climbing 4.75% and MicroStrategy (MSTR) surging nearly 7.4%.

One of the key drivers of the rally was the Federal Open Market Committee (FOMC) meeting, where the US central bank opted to keep interest rates steady at 4.25%-4.50%. The Fed also hinted at two potential rate cuts by the end of the year, providing investors with renewed confidence in risk assets like cryptocurrencies.

The US Dollar Index (DXY) has remained at its lowest levels since early November, down more than 6% from its January peak of 110.17. This weakening dollar has further supported demand for alternative assets, including Bitcoin.

Market participants now anticipate a 16% chance of a 0.25% rate cut in May, with the probability increasing to 60.1% by June, according to CME Group’s FedWatch Tool. With growing expectations of monetary easing, traders have shown increased interest in digital assets.

Trump’s Potential Crypto Policy Boosts Optimism

In addition to the Fed’s dovish stance, speculation surrounding a major update to US cryptocurrency policy has further fuelled market enthusiasm.

Former US President Donald Trump is set to speak at Blockworks’ Digital Asset Summit (DAS) in New York City on March 20. Many investors are eager to hear if Trump will unveil significant changes to his administration’s crypto policies.

“This would be his first major update since March 6, when the national crypto reserve was established,” noted capital markets commentator The Kobeissi Letter in a post on X. “Rumours state President Trump may be making a significant change to his strategy.”

Trump’s recent pro-crypto stance has already had a substantial impact on the market. His remarks on establishing a Strategic Bitcoin Reserve helped drive Bitcoin ETF inflows to a record $3.4 billion per week, pushing BTC above the $100,000 level before setting a new all-time high above $109,000.

Investors are hopeful that his upcoming speech could reinforce a more crypto-friendly regulatory environment, adding further momentum to the current market rally.

Technical Indicators Point to Continued Upside

From a technical perspective, the crypto market’s surge is part of a rebound that began after the total market cap dropped to a multi-month low of $2.44 trillion on March 11.

Currently standing at $2.77 trillion, the market is attempting to break above the critical resistance zone between $2.8 trillion and $3 trillion. This level coincides with both the 50-day and 200-day simple moving averages (SMAs), making it a key area to watch. A breakout above this range could signal a bullish reversal, with the next target set at the all-time high of $3.2 trillion, marked by the 100-day SMA.

Meanwhile, the daily Relative Strength Index (RSI) has climbed from near oversold conditions at 31 on March 11 to 47, indicating that bullish momentum is strengthening.

Outlook: Further Gains Possible if Resistance Breaks

With the Federal Reserve maintaining a dovish outlook and expectations of pro-crypto policies gaining traction, the market appears poised for further gains. If Bitcoin successfully holds above $85,000 and the total crypto market cap breaches the $3 trillion resistance, investors could see a renewed rally towards record highs in the coming weeks.

However, a failure to break key technical levels may result in consolidation, with traders closely monitoring upcoming economic data and regulatory developments.