Bitcoin tops $25,000 for first time since June amid crypto rally
(Bloomberg) — Bitcoin briefly passed $25,000 for the first time since mid-June as momentum continued from cooler-than-expected U.S. inflation data and progress against Ethereum’s big upgrade.
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The biggest cryptocurrency rose as much as 2.2% on Sunday to $25,031, its highest level since June 13. It traded around $24,750 at 6 a.m. New York time, rising for a fifth straight day in a row driven by U.S. consumer price index data that came in below expectations. Ether gained as much as 2% to $2,030.50, after passing $2,000 on Saturday for the first time since May 31, amid optimism about the completion of the blockchain’s long-awaited software upgrade known as Merge.
“The next CPI print will be released just two days before the merger, and by then we expect a lot of pre-event momentum to be baked into the market,” Fundstrat strategist Sean Farrell said in a note on Friday. “Long- and medium-term investors should look to use any dips as buying opportunities.”
Crypto struggled through the first half of the year as the Federal Reserve raised interest rates to combat stubbornly high inflation, with prices of Bitcoin, Ether and other tokens falling by more than 50%. With US inflation data coming in below expectations over the past week, potentially paving the way for less aggressive Fed tightening, risk assets such as the Nasdaq 100 index have rallied – helping to fuel gains in crypto, which has been strongly correlated with the shares measure for months.
“Beyond increased derivatives volumes, we also speculate that crypto-native investors may start to take on more risk,” Farrell said, citing an increase in the balance of wrapped Bitcoin, which can be used as collateral in decentralized finance on Ethereum, on top of an increase last week in the stablecoin rate that points to more activity on the chain.
It is in addition to the positive development for Ether, as the Ethereum blockchain merger is now likely to happen around September 15, the network’s co-founder Vitalik Buterin said after a final test phase known as Goerli a few days ago. The merger represents a transition in how Ether tokens are minted and transactions validated, away from mining blocks using complex calculation tasks under the proof-of-work method and towards proof-of-stake. In addition, some investors are positioning themselves to potentially benefit from a possible fork that would preserve proof-of-work Ether, according to Genesis Global Trading.
Read more: Ethereum founder Buterin predicts September 15 blockchain merger
“Ether is currently being driven by new fundamentals (post-Merge tokenomics), a speculative element (the ETH PoW fork, about which much is still unknown) as well as general macro sentiment,” Genesis strategists Noelle Acheson and Willis Croft wrote in a memo Friday. “Although it has taken a breather in recent days, realized volatility has jumped since the bottoms at the beginning of the year, which both reflects the growing interest and serves as a reminder to the wider investment universe that compelling narratives in crypto markets are never far away. gone.”
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