Why a Sudden Crypto Price Surge Has Added $200 Billion to Bitcoin, Ethereum, BNB, XRP, Cardano, Dogecoin, Polygon, and Solana by 2023
BitcoinBTC, ethereum and other major cryptocurrencies have suddenly jumped higher after trading sideways this past week (and some believe the rally may just be starting).
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The Bitcoin price has risen to nearly $23,000 per bitcoin, up from lows below $20,000 this week, and has added 7% over the past 24 hours. Ethereum price is up a similar amount which reflects other top ten coins BNBBNB, XRPXRP, cardano, dogecoin and polygone. The FTX-linked solana, an ether contender, has added nearly 20%.
Bitcoin and crypto’s sudden rise to $200 billion by 2023 – which has seen some smaller coins leave bitcoin in the dust – has been put down to growing hopes that the Federal Reserve and other central banks will step down to slow rate hikes, although some have warned traders can get ahead of themselves.
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“The past couple of months have undoubtedly brought indicators of a more positive environment with respect to inflation, as well as the increasing reopening of the Chinese economy,” Max Coupland, director of CoinJournal, said in emailed comments.
Last week, data showed that the rate of US inflation fell to its lowest level in more than a year in December, a sign that price pressures may have peaked. Last year, the Fed carried out four straight interest rate increases in three quarters, followed by a half-point increase in December.
“I worry if investors are jumping on the bandwagon by assuming this means the Fed will now swing faster than expected,” Coupland added. “Fed chairman Jerome Powell has been adamant that interest rates will not be reduced until inflation is well under control, and we are still a long way from the 2% target, while uncertainty factors such as the Russian war in Ukraine remain highly unpredictable.”
In recent days, Federal Reserve officials have warned that interest rates will need to be raised to fully halt soaring inflation that hit a 40-year high in 2022. The Fed will next meet to set rates in early February, with traders which prices a 25-basis-point rate hike.
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Meanwhile, bitcoin, ethereum and other major cryptocurrencies appear to have broken their lockstep with the US stock market.
“While the US stock indexes clearly found the New Year’s rally on Wednesday, bitcoin is still holding ground above $20,000,” Yuya Hasegawa, crypto market analyst at Bitbank, said via email.
“Indices may still decline further to find a local bottom in the next few days, bitcoin is likely to be supported at the $20,000 psychological level. In other words, bitcoin’s fall is likely to be shallow.”
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