Sentiment in the crypto market continued to improve at the start of the year after a crash last year. Bitcoin, the oldest and best-known digital currency, is once again trading above $20,000 (nearly $18,500). Other crypto values such as Ethereum or Tether were also able to recover somewhat in 2022 from their sometimes significant price losses. The market value of all nearly 22,300 digital systems is again close to a trillion dollars.
After a recovery over the past week, bitcoin surged above $21,000 over the weekend. On the night of Monday, the Bitfinex trading platform recorded a high of $21,433. This is the highest level since the end of October. Ether, the second-largest digital currency by market value, is once again due at more than $1,500 — more than since early November. Bitcoin recently cost $20,800.
FTX bankruptcy and interest rates dragged prices down
The prices of many cryptocurrencies had collapsed in the past year. Bitcoin plummeted from just over $46,000 to under $16,000, losing about two-thirds of its value. A major reason was the swing in interest rates by many central banks, driving investors out of risky assets like digital currencies. A second reason was the crash of the major crypto exchange FTX, which dealt a heavy blow to the entire industry. Distrust of crypto companies quickly increased and put a lot of pressure on the market.
Hope for less rate hikes
Since the beginning of the year, however, the situation has eased somewhat. “Hopes for a slowdown in the pace of the Fed’s rate hike cycle have apparently fueled risk appetite,” said crypto expert Timo Emden. Last year, the Federal Reserve braced itself against high inflation with sharp interest rate hikes. A much more relaxed pace is expected for the current year as inflation has shifted down a gear.
Nevertheless, Emden gives a warning: “The current price rally is impressive and frightening at the same time. Private investors in particular could now come up with the idea of chasing rising prices.” However, it remains to be seen how long the hunger for Bitcoin and Co will last. Crypto assets such as Bitcoin are considered extremely volatile. Regulators such as the German BaFin therefore regularly warn against interference, especially by small investors.
Source: Krone
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
