The bitcoin price has rocketed to almost $23,000 per bitcoin, up from lows of under $20,000 this week, adding 7% over the last 24 hours. The ethereum price is up a similar amount reflecting other top ten coins BNB
Bitcoin and crypto’s sudden $200 billion 2023 rally—that’s seen some smaller coins leave bitcoin in the dust—has been put down to rising hopes the Federal Reserve and other central banks will move to slow interest rate hikes, though some have warned traders may be getting ahead of themselves.
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“The last couple of months have undoubtedly brought indicators of a more positive environment with regards to inflation, as well as the boost of the Chinese economy reopening,” Max Coupland, the Director of CoinJournal, said in emailed comments.
Last week, data showed the pace of inflation in the U.S. fell to its lowest level in more than a year in December, a sign that price pressures may have peaked. Last year, the Fed implemented four straight three-quarter point rate hikes, followed by a half-point raise in December.
“I do worry whether investors are jumping the gun by presuming that this means the Fed will now pivot sooner than expected,” Coupland added. “Fed chair Jerome Powell has been adamant that rates will not taper until inflation is firmly under control, and we are still a long way from the 2% target, while uncertainties such as the Russian war in Ukraine still loom as highly unpredictable.”
Over the last few days, Federal Reserve officials have warned interest rates need to go higher to fully stamp out soaring inflation that hit a 40-year high in 2022. The Fed will next meet to decide rates in early February, with traders pricing in a 25-basis point rate increase.
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Meanwhile, bitcoin, ethereum and other major cryptocurrencies appear to have broken their lock-step with the U.S. stock market.
“While the U.S. stock indexes clearly snapped their new-year rally on Wednesday, bitcoin still holds its ground above $20,000,” Yuya Hasegawa, crypto market analyst at Bitbank, said via email.
“The indexes may still go down further to find a local bottom in the next few days, bitcoin will likely be supported at the $20,000 psychological level. In other words, bitcoin’s dip will likely be shallow.”