The cryptocurrency market shows signs of recovery amid cooling U.S. inflation and other macroeconomic factors.
As the world's largest cryptocurrency by market cap, Bitcoin recently broke through the $21,000 barrier, reaching a two-month high. This rally boosted other cryptocurrencies, with Ethereum (the second-largest crypto) surpassing $1,500. The total crypto market capitalization has regained $1 trillion.
Bitcoin’s Sustained Rally
Bitcoin has risen for 11 consecutive days, peaking at $21,089 (+11.89% daily). Year-to-date (2023), Bitcoin’s price has surged over 26%.
At press time:
- Bitcoin price: $20,795.5
- Market cap: $400+ billion (surpassing Walmart and Tesla)
- Liquidations: 58,000 accounts liquidated in 24 hours, totaling $243 million (~¥16.29 billion).
Altcoins Follow Bitcoin’s Lead
Ethereum climbed to $1,563** (+30% YTD), while BNB, XRP, and OKB also rallied. According to CoinGecko, the total crypto market cap has rebounded above **$1 trillion.
Crypto-related stocks soared:
- Coinbase shares rose 50% this week.
- Bitcoin miner Marathon Digital (MARA) surged 120% in 2023.
Recovery After a Brutal 2022
2022 marked a "crypto winter" due to aggressive Fed rate hikes and collapses like FTX and Three Arrows Capital. Bitcoin bottomed near $16,000 in December 2022—still ~75% below its November 2021 all-time high.
Bitcoin was the worst-performing asset globally in 2022, declining 65.41%. However, analysts note diminishing sell-offs amid negative events, suggesting the worst may be over.
Key Drivers of the Rebound
- Cooling U.S. Inflation: December CPI fell 0.1% month-over-month (the largest drop since April 2020), fueling optimism about slower Fed rate hikes.
- Risk-Asset Correlation: Cryptos and stocks now move in sync, making CPI data pivotal for both markets.
- Dollar Weakness: A softer dollar creates favorable conditions for crypto rallies.
👉 Why Bitcoin’s Halving Could Spark the Next Bull Run
FAQs
Q: Is Bitcoin’s recovery sustainable?
A: While short-term trends are positive, macro factors (Fed policy, regulation) remain critical.
Q: What’s Ethereum’s outlook after the Merge?
A: Post-Merge, Ethereum’s reduced energy use and deflationary model may support long-term growth.
Q: Should I invest in altcoins now?
A: Diversify cautiously—stick to projects with strong fundamentals and avoid hype-driven tokens.
Q: How does inflation affect crypto prices?
A: High inflation typically pressures risk assets, but cooling inflation (like current trends) boosts investor confidence.
👉 Expert Tips to Navigate Crypto Volatility
Looking Ahead
Bitstamp CEO Jean-Baptiste Graftieaux predicts the next Bitcoin bull cycle within two years, possibly aligned with the 2024 halving event. Meanwhile, traders should monitor:
- Fed interest rate decisions
- Institutional adoption
- Regulatory developments
For now, the crypto market’s resilience hints at cautious optimism—but staying informed is key.