Inflation played along with bitcoin
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Quotes of leading cryptocurrencies are confidently retreating from local minima. The bitcoin rate, after a two-month break, returned to a level above $18,000, having added more than 10% since the beginning of the year. The second most popular cryptocurrency, ether, has risen in price by almost 18%. The market was supported by macroeconomic data from the US, which strengthened investors’ confidence that the Fed will slow down the key rate hike. However, market participants do not expect further growth in the value of cryptocurrencies.
According to Coinmarketcap.comOn January 12, the Bitcoin exchange rate was approaching $18.39 thousand, the highest value since the beginning of November 2022. By 20:00, the rate stabilized near the mark of 18.1 thousand, which is 1% higher than the close of the previous day. The steady growth of the leading cryptocurrency continues for the second week, and during this time it has grown in price by almost 11%.
Other popular virtual currencies also grew in price.
Since the end of December, Ethereum quotes have risen by almost 18% and, after a two-month break, exceeded $1.4 thousand. Quotes of other popular currencies – Ripple, Binance Coin, Cardano – returned to the levels of the first decade of December.
“In the cryptocurrency market, the correlation between tokens reaches 90%. Bitcoin is almost always a locomotive for other cryptocurrencies,” notes Vladislav Antonov, financial analyst at BitRiver. The total market capitalization for the first time since December 11 exceeded $890 billion, which is almost $100 billion higher than the values of the end of 2022.
The rise in the value of bitcoin in early January was expected by market participants. This is the same traditional Christmas rally that happens year after year, but this year moved a couple of weeks due to the collapse of the FTX exchange (see “Kommersant” dated November 14, 2022), says Ruslan Sharov, CEO and co-founder of the Cheelee GameFi platform.
In addition, the recovery of digital currencies is associated with a decrease in fears about further tightening of the Fed’s monetary policy, experts point out.
This was facilitated by the publication of the latest data on new jobs and consumer prices in the country.
The number of jobs in the US economy in December increased by 223 thousand, while analysts polled by the agency Bloombergexpected growth of only 203 thousand. Also, the US Department of Labor reported that consumer prices in the country rose by 6.5% in December, which is 0.6 percentage points (pp) lower than in November.
“Inflation is one of the main indicators that the Fed takes into account when deciding to change the key rate. If inflation is steadily declining, then investor confidence that the key rate increase will not exceed 25 percentage points is growing,” says Roman Nekrasov, co-founder of the ENCRY Foundation.
Support for the crypto market, according to Dmitry Machikhin, CEO of the BItOK.org service, was provided by the creation of a $1 billion Binance fund to support the industry and the company’s plans to increase the number of employees. Binance CEO Changpeng Zhao on January 11 announced plans to further expand the business and increase the number of staff in 2023 by 15-30%. This is lower than the growth rate in 2022, when the team grew from 3,000 to 8,000 people, but runs counter to the policies of other market participants.
Since the beginning of the year, Coinbase and Genesis Global Trading have announced plans to cut staff. The first plans to cut about 950 employees, the second – more than 30% of the staff, bringing their number to 145 people. Under such conditions, Binance Coin quotes were among the growth leaders among the most liquid cryptocurrencies, having added more than 30% since the beginning of the year.
However, interviewed market participants doubt the sustainability of the rise in prices.
According to Dmitry Machikhin, a return to the bull market is not expected, and any macro and crypto event with a minus sign can nullify all achievements. “Bitcoin has already reached its ceiling in the current period of growth. And even up to $20 thousand. the cost of the first cryptocurrency will not reach in the coming days, ”notes Roman Nekrasov. According to him, the bitcoin rate is likely to correct to $17.5 thousand. As Ruslan Sharov expects, this year there will be a tightening of regulation of the entire industry, especially for centralized crypto exchanges and stablecoin issuers, so we should expect the return of the “bullish” cycle before the second half this year.
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