3 - 5 minute read
Bitcoin is back in the headlines as it breaks the $20,000 barrier once again, just days after breaking a two-month-long ranging-market spell and printing a string of green daily candles. The top cryptocurrency by market capitalization has grown over 11% in the past 24 hours, tapping $21,000 in the early hours of January 14th before recoiling to $20,817 at the time of writing. In the past seven days, the asset’s price has surged by over 23%, with $76.61 billion added to its market cap.
Ether (ETH) has followed closely behind, adding over 9% in the past day to trade just over $1,536 at the time of writing. This rally is largely attributed to the upcoming “Shanghai hard fork” which is set to take place in March. The upgrade is expected to improve a range of functionalities on the Ethereum network and will also allow validators to “unstake” and withdraw Ether which they have had locked up in the beacon chain since 2020.
Other cryptocurrencies have also benefited from the market-wide rally, with SOL, MATIC, DOGE, ADA, BNB and XRP adding roughly 71%, 21.92%, 18.58%, 20.76%, 13.36% and 13.46% respectively. In the past 24 hours, the total value of liquidations reached $731.63 million, with 135,136 short positions being wiped out, according to data by Coinglass.
The current market rally is being attributed to improved economic indicators that have encouraged investors back into the market. CPI data released by the US Labor Department showed inflation cooled off slightly in December, re-igniting hopes of the Federal Reserve slowing the pace of interest rate hikes.
“Another month in which inflation falls, now lower than November 2021. Month-to-month even showing negative numbers. Fuel for a relief period of 2-4 months for the markets, but probably short-term correction soon for Bitcoin,” said Michaël van de Poppe, a seasoned analyst and CEO of Trading Platform Eightglobal.
The resurgence has also been a pointer that investors are moving past the FUD created by the collapse of Sam Bankman-Fried’s crypto empire and other bad actors.
“Bitcoin has now reclaimed $20,000 for the first time since before the FTX collapse. Symbolically shows that no one can stop this movement, not SBF or any other individual,” crypto analyst Will Clemente tweeted.
Fundamentally, this week’s supernova rally has been attributed to large crypto investors buying BTC as market sentiment turned positive for the top cryptocurrency, particularly in the US. “Amongst many of the foreshadowing metrics for this 2023 breakout was the rapidly growing amount of addresses holding 100 to 1,000 $BTC. Price pumps generally occur market-wide when whales accumulate Bitcoin,” on-chain data vendor Santiment tweeted.
In addition, yesterday, Ki Young Ju, Co-founder & CEO of crypto analytics platform Cryptoquant, also wrote that an unknown entity bought $4 billion worth of BTC futures in market orders for three consecutive hours.
It appears that the crypto market is once again on the upswing, with Bitcoin leading the way. While there may be some short-term corrections in the future, the overall sentiment is positive and investors are bullish on the future of cryptocurrencies. It will be interesting to see how the market develops in the coming weeks and months, but for now, it seems that the bulls are back in charge.