Bitcoin has had a great run with a near 40% rise this year, even after Genesis, a crypto lender declared bankruptcy months after FTX sunk in November. Let us decipher the driving force behind the cryptocurrency rally.
Most markets have their peak sales in January as money is deployed then by fund managers, according to industry insiders. This year has seen a rise in risk assets as NASDAQ registered an 8.8% gain. Bitcoin on the other hand was massively shorted after FTX caved in last year. This January during crypto’s unexpected price rise, short sellers closed their positions to buy Bitcoin, skyrocketing the price further.
Following the FTX’s closure, open contracts for Bitcoin on Deribit climaxed, indicating optimum activity levels, noted Luuk Stijers, chief commercial officer at Deribit. Crypto market panic may have eased in January with market indicators suggesting an institutional interest resurgence.
Despite the Bitcoin comeback, experts envision further drawbacks, which may cause a drop below the $15,480 previous fall. Analysts think the market has more risks than opportunities currently.
There is a challenge macroeconomically, owing to high inflation rates and looming recession in the United States. Following the collapse of several crypto enterprises, regulators can drown the market to new lows quite easily, observers say. But Stijers is hopeful that the rally will push the market into recovery mode.
Tesla did not trade in Bitcoins during 2022’s final months, even though Bitcoin fell to $15,480, the lowest in two years. Tesla banked on Bitcoin and invested $1.5 billion in 2021 when crypto was trading at more than $30,000. Tesla noted a $34 million loss in the last quarter, indicating digital asset value at $184 million, a fall from $218 in September.
The Bitcoin prices rose in the past week, trading at $23,027, while Ether gained 5% ($1,610) in the same period, noted CoinDesk data.
Here are how some crypto companies traded in the past week:
Coinbase Global Inc. amassed 8.6% to get $53.67 last week while MTSR shot up 9.6% to $242.77. Riot Blockchain rose 7.1%, and rival company, Marathon Digital Inc., went up 17.9% gaining $8.65. EBON stocks lost 10.9% in the past week.
ProShares BITO rose to 9.3% while Short Bitcoin ETF BITI dropped to $27.53. Grayscale Bitcoin GBTC went up 5.5% to reach $12.13 by Thursday last week.
It would be interesting to track how other crypto mining companies such as Bit Mining Ltd. (NYSE: BTCM) fared in comparison to the other industry actors on a week-by-week basis.
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