Crypto market shows signs of life as Bitcoin jumps over 20 per cent – but what’s behind it?
Bitcoin investors are enjoying a stellar start to the year as prices in the flagship cryptocurrency rebound from historic lows seen after the collapse of crypto exchange FTX in November.
The value of Bitcoin has leapt 22 per cent this week alone, with Bitcoin now valued at over $21,000, compared to $15,000 in November.
The recent spike follows a more gradual increase in which the currency’s value has climbed by over $1,000 in the opening two weeks of the year.
A rebound in prices follows a torrid year for investors in which over $1 trillion was wiped from the value of the market, particularly after FTX filed for bankruptcy, sparking fears of contagion across the market.
Analysts said today more positive inflation prints in the US and the prospect of easing rate hikes from the Fed had helped spur a rebound in the value of Bitcoin this year.
“With CPI coming in line with forecasts and showing a slowdown in headline inflation, this perhaps gives more confidence to the market that the Fed may not have to be as aggressive with future rate hikes, or finish rate hikes at a lower terminal rate, and that the bottom is potentially in for markets,” Simon Peters, an analyst at EToro, said.
Peters added that the investors cashing in hundreds of millions of dollars’ worth of short positions around a dip in prices may have also helped fuel the recovery.
Financial commentator Susannah Streeter told City A.M. today the bounce will provide some respite for Bitcoin backers after a turbulent twelve months in the market.
“Bitcoin’s bounce higher will come as relief for speculators who saw the value of their holdings decimated as many others abruptly left the market and newcomers were scared away,” she said.
Soaring inflation and broader market volatility ushered in a so-called ‘crypto winter’ last year, wiping out
investors’ holdings and clearing space for scammers to flood the market.
Recent data found three-quarters of Bitcoin millionaires lost their fortunes, while the number of scams rose by over 27 per cent.