For the first time since early November, the total market capitalization of the cryptocurrency industry exceeded $1 trillion, according to data from CoinGecko.
On January 14, Bitcoin increased to over $21,000 on hopes that inflation may have peaked and reached a bottom. The biggest cryptocurrency increased up to 7.5% to $21,299 in value. Since November 8 it hadn’t been above $20,000, and January 14 was its 11th straight day of growth. Ether, the second-largest cryptocurrency, rose up to 9.7%, and other coins like Cardano and Dogecoin also registered significant gains.
Before this most recent breakout, the price of Bitcoin had been trapped in a small range between $16,000 and $17,000 for weeks. The rising movements have surprised shorts; according to statistics from Coinglass, cryptocurrency short liquidations have exceeded $100 million in five of the last six days. The biggest amount was reached on January 14 and exceeded $296 million.
The increases coincided with consumer pricing data released last week that indicated a decline in inflation from December levels to January levels. Following that additional cooling, the Federal Reserve is on course to transition to smaller interest-rate rises, but it’s expected to keep doing so until price pressures show more certain indications of moderating. Risky assets, such as the Nasdaq 100 stock index, which has increased for six days in a row, have benefited from this.
Following the soft CPI print, cryptoassets fared nicely, indicating that the correlation between crypto and macro is not about to disappear any time soon, as per Sean Farrell, head of digital asset strategy at Fundstrat. The price action that has continued this week is undoubtedly positive, and barring any forced liquidations by the financially challenged crypto business DCG, there is a strong likelihood that the absolute bottom has been reached for cryptocurrency pricing.
The macroeconomic environment, which is still gloomy, has been overshadowed by the declining CPI and the news that the FTX liquidators had recovered $5 billion in cash assets, as per Hayden Hughes, chief executive officer of social-trading platform Alpha Impact. Going into the upcoming FOMC meeting later this month, the markets are moving strongly in the right direction, he added.
(With Bloomberg inputs)
This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.
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