After a brutal correction in 2022, Bitcoin (BTC) started 2023 on a solid footing. The world’s largest cryptocurrency is already up 40% this month and is on the verge of posting its best January in a decade since 2013.
This month of January added $280 billion to the overall crypto market. While heavyweights like Bitcoin and Ethereum have rallied 40% in price, some smaller altcoins like Solana and Axie Infinity have literally doubled in value this month.
The recent recovery in the broader crypto market comes amid expectations of slow rate hikes by the Fed. In addition, the Fed is likely to cut borrowing costs very soon as high inflation cools.
This month’s rally shows that the cryptocurrency market is overcoming the tremors caused by the collapse of crypto exchange FTX. The market is ready to settle down and heal from the scars of a major liquidity crisis caused by the fall of FTX and other crypto lenders like Genesis etc. Noelle Acheson, author of the Crypto Is Macro Now newsletter, wrote:
January “feels like a month of new beginnings, with clarity emerging on bankruptcy proceedings, corporate restructuring and market fundamentals suggesting the bottom is behind us.”
Will the Bitcoin Rebound Last?
The world’s largest cryptocurrency, Bitcoin, has a strong relationship with tech stocks. Besides, the recent surge in BTC price also follows the recent tech upsurge. Some analysts have also warned that rate hikes in the market could last longer than expected.
Last week, strategists at Bank of America Corp. led by Michael Hartnett, said the comeback of Bitcoin and other speculative assets is “likely to reverse” as wages, oil and consumer prices rise to shift the narrative of a potential “soft landing.” Fed Chair Jerome Powell has also hinted that interest rates could remain elevated for a while longer.
On the other hand, optimists are betting on the current momentum and expect Bitcoin to reach $25,000 in this ongoing rally.
Bhushan is a FinTech enthusiast and has a keen sense of understanding the financial markets. His interest in economics and finance draws his attention to the emerging blockchain technology and cryptocurrency markets. He is constantly in a learning process and motivates himself by passing on the knowledge he has acquired. In his spare time he reads thriller fiction novels and sometimes explores his cooking skills.
The content presented may contain the personal opinion of the author and is subject to market conditions. Do your market research before investing in cryptocurrencies. The author or the publication assumes no responsibility for your personal financial loss.
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