Bitcoin BTC Price Hovering Near $23K; Why AI token prices are on a month-long tear

Bitcoin Stays Near $23K; LDO jumps on Armstrong Tweet

What did US central bank chairman Jerome Powell mean in remarks on Tuesday at the Economic Club of Washington DC?

Crypto investors and others spent much of Wednesday weighing a repeat of Powell’s remarks from a week ago that the “deflation process” had begun but that the Federal Reserve would remain vigilant in stemming high inflation; and somewhat more hawkish comments from three Fed governors, including John Williams, who suggested central bankers would consider more aggressive rate hikes if the inflationary climate worsened.

Bitcoin digested the recent developments and remained stable throughout the day around its current support just below $23,000. The largest cryptocurrency by market cap recently traded at $22,970, down 1.6% in the last 24 hours. BTC’s recent pause follows a January surge to remember.

“Bitcoin’s strong start to the year appears to be over for now,” Edward Moya, market analyst for forex market maker Oanda, wrote in an email. “After hitting some key technical resistance just above the $24,000 level, Bitcoin is entering consolidation mode.”

Moya added that bitcoin could lose its current perch with “the next big move in bond yields.”

“Volatility in the bond market will be crazy after the Valentine’s Day inflation report, which could mean Bitcoin could move towards the $20,000 level if stocks get hammered over the next few sessions,” he wrote.

Yields on two- and 10-year US Treasuries both fell slightly on Wednesday.

Meanwhile, ether followed bitcoin’s lead, holding its latest support comfortably above $1,600, although it was recently down over 2% from Tuesday’s same time. But as CoinDesk market analyst Glenn Williams noted Wednesday in a column, the second-largest crypto by market capitalization had regained its correlation to BTC after lagging so far this year. Both cryptos are up approx. 38% since January 1.

Other major cryptos by market cap were in the red recently, though Lido DAO’s LDO token jumped 8% at one point, much of the gain coming late Wednesday (ET) after Coinbase CEO Brian Armstrong tweeted that he had heard rumors from US Securities and the Exchange Commission (SEC) wants to ban retail investors from engaging in cryptocurrency betting, the revenue-generating technique at the heart of running blockchains including Ethereum.

“I hope that is not the case, as I think it would be a terrible path for the United States if it were allowed to happen,” Armstrong wrote.

Stock markets closed with the tech-heavy Nasdaq and the S&P 500, which has a hefty technology component, falling 1.1% and 1.7%, respectively, as markets also continued to mull over mixed recent fourth-quarter earnings and jobs data that have been defiantly strong , suggesting that the Fed’s monetary policy has not been entirely successful.

“If the Valentine’s Day inflation report ends up being a warm one, traders may start believing in the Fed’s hawkish pullback,” wrote Oandas Moya.

What is AI Surge and will it last?

In a February 8 analysis, CoinDesk editor Shaurya Malwa highlighted the huge gains of AI-related tokens, including the platforms of Alethea’s artificial liquid intelligence (ALI), fetch.ai (FET) and SingularityNET (AGIX), which has increased as much as 220%. Malwa wrote that institutional interest has helped create a compelling case for crypto traders to bet on AI-focused tokens as the next growth sector. But will the momentum last? Opinions vary as Malwa notes in a excerpts from his story.

AI broadly refers to the simulation of human intelligence in machines programmed to think and act like humans. Popular applications for this technology have so far been limited to chatbots, self-driving cars, online marketplace search optimization and image generation software – but futuristic uses envision fully autonomous cities, cyborg humans and interstellar travel.

Much of the recent surge in AI tokens emerged after the public launch of chatbot ChatGPT and image generation software Dall-E in mid-2022. Both are traditional software that do not use cryptocurrencies or blockchain and were launched by OpenAI, which recently raised 10 billion dollars from Microsoft at a value of 29 billion dollars.

Such institutional interest has helped create a compelling case for crypto traders to bet on AI-focused tokens as the next growth sector.

“The growth opportunity around the AI ​​and Web3 space combines early interest, potential and hype,” says Ravindra Kumar, founder of crypto wallet Frontier. “While it is true that there may be some hype around AI intervention in the crypto space, we are seeing the emergence of innovative and compelling use cases.’

Aditya Khanduri, Head of Marketing at Biconomy, takes a softer approach: “I think the current AI trend is still quite speculative, leading to a jump for tokens like OCEAN, ALI, AGIX. Some of the tokens with more buzz and followers have pumped, and it’s less about the actual technology behind it.”

“This is because the current AI tokens and Web3 projects do not yet know what these decentralized AI tools look like. There are many unanswered challenges and a lot to figure out,” Khanduri told CoinDesk in a recent chat.

The likes of Khanduri say token-based usage while scaling AI software is a difficult problem to solve.

“Say an AI tool reaches 250 million users. What will its infra look like? How will people use it? How will the data be trained? Where does the token fit in? Could you even have a way to reward people for their data if you used it to train your models?” he said.

Meanwhile, some market watchers remain wary of the AI ​​token hype.

“When the market starts to pick up a bit, all kinds of new trends come out of the woodwork. And they are not all as solid as they may appear, says financial market consultant Valentina Drofa to CoinDesk.

“There is a risk that this whole ‘new trend’ is going to end up in empty hype, as there are a lot of speculators who will try to use short-term price pumps,” Drofa added, referring to the recent multiple gains set up of some tokens.

“The industry at large will end up dealing with the long-term fallout and another dent in its image. Such cycles become quite tiresome and sad to observe over and over again,” she said.

Crypto prices continued their cautious upward move following Federal Reserve Chairman Jerome Powell’s comments on disinflation yesterday. Fidenza Macro Blog Author Geoffrey Chen shared his analysis. In addition, the non-profit led an effort to raise millions of dollars in crypto to help the victims of the great earthquake in Turkey. CoinDesk Türkiye Editor-in-Chief Serdar Turan weighed in. SPiCE VC managing partner and co-founder Tal Elyashiv and Kraken Head of Strategy Thomas Perfumo also joined the conversation.