After a brutal correction throughout 2022, Bitcoin (BTC) started this year of 2023 on a solid footing. The world’s largest cryptocurrency is already up by 40% this month and is all set to record its best January in a decade since 2013.
This month of January has added $280 billion to the entire crypto market. While heavyweights like Bitcoin and Ethereum have posed a 40% price rally, some smaller altcoins like Solana and Axie Infinity have literally doubled in value this month.
The recent rebound in the broader crypto market comes amid expectations of slow interest rate hikes by the Fed. Furthermore, as the high inflation cools down, the Fed will likely cut borrowing costs very soon.
This month’s rally shows that the cryptocurrency market is coming out of the tremors caused by the collapse of the crypto exchange FTX. The market is willing to settle and heal from the scars of a major liquidity crisis triggered by the fall of FTX and other crypto lenders like Genesis, etc. Noelle Acheson, author of the “Crypto Is Macro Now” newsletter wrote:
January “feels like a month of new beginnings, with emerging clarity as to bankruptcy proceedings, corporate restructurings and market fundamentals pointing to the bottom being behind us”.
Will the Bitcoin Rebound Last?
The world’s largest cryptocurrency Bitcoin has shared a strong relationship with tech stocks. Besides, the recent surge in the BTC price also comes following the recent bounce in the tech space. Some analysts have also warned that the rate hikes in the market could stay longer than expected.
Last week, Bank of America Corp. strategists led by Michael Hartnett said that the comeback in Bitcoin and other speculative assets “will likely reverse” if wages, oil, and consumer price increases to shift the narrative of a possible “soft-landing”. Fed Chair Jerome Powell has also hinted that the rates could remain elevated for a while.
On the other hand, optimists are betting on the current momentum and expect Bitcoin to touch $25,000 in this ongoing rally.