The bitcoin price has shot up to nearly $23,000 per bitcoin, from lows of less than $20,000 this week, adding 7% in the last 24 hours. The ethereum price has risen a similar amount mirroring other top ten BNB coins
The sudden $200 billion rally of Bitcoin and cryptocurrencies in 2023—that has seen some smaller coins leave bitcoin in the dust— has been attributed to rising hopes that the Federal Reserve and other central banks will act to curb interest rate rises, although some have warned that traders may be getting ahead of themselves.
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“The past few months have certainly brought indicators of a more positive environment regarding inflation, as well as momentum for the reopening of the Chinese economy,” Max Coupland, a director at CoinJournal, said in emailed comments.
Data last week showed the pace of inflation in the US 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 consecutive three-quarter-point rate hikes, followed by a half-point hike in December.
“I worry if investors are quick to assume this means the Fed will now turn around sooner than expected,” Coupland added. “Fed Chairman Jerome Powell has insisted that rates will not be lowered 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.
In recent days, Federal Reserve officials have warned that interest rates must rise further to stamp out runaway inflation that hit a 40-year high in 2022. The Fed will next meet to decide rates in early February, with traders quoting in a 25 basis point rate increase.
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Meanwhile, bitcoin, ethereum, and other major cryptocurrencies appear to have broken out of their tight stride with the US stock market.
“While US stock indices clearly broke out of their new year rally on Wednesday, Bitcoin is still holding its own above $20,000,” Yuya Hasegawa, a crypto market analyst at Bitbank, said by email.
“Indices may still drop further to find a local bottom in the coming days, Bitcoin is likely to support the psychological $20,000 level. In other words, Bitcoin’s fall will likely be shallow.”