Home World Bitcoin Rally in 2023 Gains Speed ​​as Crypto Currency Breaks $23,000

Bitcoin Rally in 2023 Gains Speed ​​as Crypto Currency Breaks $23,000

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2022 has been a tough year for Bitcoin. Investors are now cautiously eyeing 2023 when it comes to cryptocurrencies.

Thomas Trutchell | Photo library | Getty Images

Bitcoin rose further over the weekend as traders took news of yet another crypto bankruptcy in stride and placed bets on Federal Reserve System “reversal” to lower interest rates.

According to data from CoinGecko, the price of the #1 token briefly exceeded $23,000 for the first time since August 19, 2022. It has since fallen slightly to $22,859.20. This jump has sent Bitcoin up nearly 39% since the beginning of January.

Ether, the second-largest digital coin, rose to $1,664.78 on Saturday — the first time it has topped $1,600 since Nov. 7, 2022. As of 6:40 a.m. ET, the ether was worth $1,639.30 apiece.

Bitcoin started 2023 on a positive note, with investors hoping for an end to the tightening of monetary policy that spooked market players last year.

The Fed and other central banks began cutting interest rates in 2022, shocking holders of risky asset classes such as stocks and digital tokens. Shares of publicly traded technology companies and private venture capital-backed startups were particularly hit, as investors sought protection in assets considered safer, such as cash and bonds.

With U.S. inflation now showing signs of cooling, some market participants are hoping that central banks will begin to reduce the pace of rate hikes or even cut them. Economists CNBC previously reported they predict a Fed rate cut may happen already this year.

“Fed tightening seems easier and inflation less of a risk,” Charles Hayter, CEO of crypto data site CryptoCompare, said in comments to CNBC via email. “There is hope that there will be more caution in rate hikes around the world.”

The Federal Reserve is likely to keep interest rates high for now. However, some officials at the bank recently called for a reduction in the size of quarterly rate hikes, fearing a slowdown in economic activity.

The world’s most popular digital currency, bitcoin, is “looking more and more like it’s bottomed out,” according to Vijay Iyer, vice president of corporate and international development at crypto exchange Luno.

According to Aiyar, bitcoin short sellers were hit by the sudden price increase. Short selling is an investment strategy in which traders borrow an asset and then sell it in the hope that its value will decline.

The destruction of those short positions by the rise in the price of bitcoin has added “fuel to the fire,” Aiyar said, as short sellers are forced to cover their bets by buying back the borrowed bitcoins to close them out.

What crypto collapse?

Investors don’t seem to have been too excited by the collapse of leading crypto companies linked to the insolvency of digital currency exchange FTX in November.

Last week, the credit department of the New York crypto investment company Genesis became the latest victim of the crypto crisisseeking bankruptcy protection in a “mega” filing that lists aggregate liabilities in the $1.2 billion to $11 billion range.

“The Genesis circle has been playing out for a while and is probably already priced. FTX, on the other hand, has already had a significant impact on many investors, the market psychology and the pricing of several toxic assets,” Mati Greenspan, founder and CEO of crypto-investment consultancy Quantum Economics, told CNBC.

“However, it is worth noting that the price of bitcoins itself is quite limited, since FTX did not have them on the balance sheet.”

Bitcoin is still about 67% below its all-time high despite the recent surge.

Crypto’s recent fall is different from past cycles, largely due to the role of leverage. Major crypto players have engaged in risky lending practices, offering high returns that many investors now find unacceptable.

It started in May with the collapse of terraUSD – or UST – an algorithmic stablecoin that was meant to be pegged to one another with US dollar. The UST crash caused its sister token terraUSD luna to crash and hit businesses affected by both tokens.

Three Arrows Capital, a crypto bullish hedge fund, plunged into the stage of liquidation due to exposure to terraUSD.

Then he came The November FTX crash, one of the world’s largest cryptocurrency exchanges. It was run by Sam Bankman-Fried, an executive who was often in the spotlight.

The fallout from FTX continues to reverberate through the cryptocurrency industry. About $2 trillion in value has been wiped from the overall crypto market since the peak of the crypto boom in November 2021, during a deep recession known as “crypto winter.”

One analyst warned that technical indicators suggest there could be some pullback from the token’s recent rally.

Yuya Hasegawa, a crypto market analyst at Japanese bitcoin exchange Bitbank, said that while bitcoin’s trend indicators “generally signal a strong uptrend,” its relative strength indicator, or RSI, “is deviating from the upward price movement and starting to fall down, which is not a good sign for the current price trend.”

“Bitcoin may test its August high and find support at $20k~$21k, but with its RSI divergence and several big tech gains ahead this week, it could become quite volatile,” Hagesawa said in a note on Monday .

The recent rally in bitcoin prices, however, has given some investors hope that the ice may be melting.

Greenspan said bitcoin’s bullish moment is typical of the cryptocurrency as investors await the next so-called “halving,” a change in the bitcoin network that cuts miners’ rewards in half. Some investors see this as a positive for the token’s price as it reduces supply.

The next halving should take place between March and May 2024.

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