Bitcoin has been reinforced by the global economy
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Participants in the cryptocurrency market continue to play for an increase. The bitcoin rate has consolidated above $23,000, returning to the values of August 2022. Since the beginning of the year, the leading cryptocurrency has risen in price by 40%. Experts attribute the rise in quotes to the return to the market of both private and institutional investors amid optimism due to lower inflation in the US and expectations of growth in the Chinese economy.
According to the data Coinmarketcap.com, On January 23, the bitcoin (BTC) rate exceeded $23 thousand. During trading, it reached $23.14 thousand, which is almost 2% higher than the closing values of the previous day. Bitcoin’s steady rise continues for the fourth week in a row, during which time it added almost 40% and returned to the levels of five months ago.
Other cryptocurrencies have also shown steady growth since the beginning of the year. Thus, ether rose in price by a little more than 35% and fixed above the level of $1.6 thousand, which is close to the highs since September last year. Quotes of other popular cryptocurrencies – Ripple, Binance Coin, Cardano – increased by 24-53% and returned to the levels of the beginning of last year’s November.
Optimism in the cryptocurrency market is associated with a general improvement in investor sentiment against the backdrop of lower inflation in the US and easing of quarantine measures in China.
In December, US consumer prices rose only 6.5% year-on-year, down 0.6 percentage points (pp) from November and 2.6 percentage points from their peak in June. Under such conditions, Fed Governor Christopher Waller, a supporter of aggressive rate hikes last year, advocated cutting the pace of rate hikes to 25 basis points (bp) as early as the Feb. 1 meeting.
This, coupled with the Chinese authorities’ abandonment of the “zero tolerance” policy regarding COVID-19, improved expectations about the outlook for the global economy (see “Kommersant” dated January 18).
CME futures price the Fed’s rate hike by 25 bp. to 4.75% at the next meeting of the regulator with a probability close to 100%.
“The slowdown in the rate hike step had a positive effect on market risk. The dollar continues to fall in the foreign exchange market, increasing risk appetite,” notes Vladislav Antonov, financial analyst at BitRiver.
A significant improvement in economic forecasts, explains Igor Rylnikov, head of the EMCD partnership development department, fuels the interest of retail and institutional investors in buying cryptocurrencies, especially against the background of the fact that in recent months bitcoin and many altcoins have been trading at the lowest levels in recent years. “Private investors come to the market on positive news, giving preference to bitcoin as the “father” of all cryptocurrencies and the safest of them in a crisis,” says MarsDAO founder Vladislav Utushkin.
The effect was amplified by the high speculative component when trading cryptocurrencies. According to Vladislav Antonov, since the beginning of the year, two important technical levels have been passed in bitcoin — $18.5 thousand and $22.5 thousand, after which protective stop orders for short positions began to work.
Digital currencies will continue to grow if the current macroeconomic forecasts of the Fed and large investment banks are confirmed in practice, market participants note.
“The recovery of the US stock market and the crypto market will not be hindered even by a slight and short recession in the US, since the high probability of these events is already included in the base scenario,” Igor Rylnikov believes.
According to Vladislav Antonov, the new targets for bitcoin are $25,000 and $30,000, which will be facilitated not only by the Fed’s policy, but also by the weakness of the dollar and US bonds against the backdrop of reaching the public debt ceiling. At the same time, Vladislav Utushkin believes that the “bear” market has not yet ended and the bitcoin rate may well return to $12,000, after which a new growth cycle of the first currency may begin.
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