The cryptocurrency markets have started the year on the right foot after falling during 2022. The price of Bitcoin, the most widely used digital token, has risen about 26% since the turn of the year and reached $21,000 for the first time since November 7.
This rise could be a sign that confidence is returning to the market after a tumultuous year plagued by interest rate hikes and cryptocurrency scandals.
The Federal Reserve implemented seven interest rate hikes during 2022, causing the prices of stocks and cryptocurrency assets to plummet. In December, the central bank raised the deposit rate to 4.50%the highest level seen since 2007.
But after signs that inflation is slowing, there is renewed hope that the Fed may lower interest rates later this year. This would likely bring a solid stream of new investment into the industry and serve to drive up prices across the board. However, any hope of a return to the 2021 peak, when Bitcoin was trading above $64,000, still seems a long way off.
Markets start to recover after FTX aftershocks
While the central bank’s policy had an undeniable effect on the markets last year, the cryptocurrency market was hit by a huge scandal that shook investors’ faith. He FTX collapseone of the largest digital exchanges, it lost billions of dollars in value in a matter of days and investors were unable to withdraw funds.
The CEO and founder of the company. Sam Bankman-Fried has been indicted on multiple counts of fraud and criminal conspiracy as a result. The affair highlighted many of the concerns investors typically have when it comes to the largely unregulated crypto markets and values plunged.
In early November, as rumors of an impending crash circulated online, the price of Bitcoin plummeted from around $21,000 to below $16,000 in a matter of days. The January surge could be seen as little more than a recovery from the FTX scandal that rocked the industry.
Anthony Scaramucci Predicts a Positive Year for Bitcoin
In recent days, the rise in the price of Bitcoin, usually a barometer for crypto markets in general, has sparked hope among investors that 2023 could see sustained gains across the board. The total value of the market has once again surpassed $1 trillion and some investors are considering a return to the stormy waters of cryptocurrencies.
antonio scaramuccibriefly White House communications director during the Trump administration and now CEO of SkyBridge Capital, believes 2023 may be a “year of recovery” for Bitcoin.
“You are taking risks but you are also believing in [bitcoin] adoption,” he said CNBC during a crypto conference last week. “So if we get the adoption right, and I think we will, [Bitcoin] could easily be a $50,000 to $100,000 in assets over the next two to three years.”
It should be noted that FTX bought a 30% stake in SkyBridge Capital last September. Scaramucci claims that this deal was based on fraudulent information and that SkyBridge can buy back that stake once the bankruptcy court has ruled on FTX’s liabilities. However, the link between the companies it gives reason for Scaramucci to hope that confidence will return to the markets.