Bitcoin (BTC-USD) has surged to its highest level since mid-August, reaching a peak of $25,104 on Thursday morning.[0] The world’s biggest cryptocurrency gained 10.7% to reach $25.21K earlier in the session, bringing year-to-date gains to just under 50%.[1] Ethereum (ETH-USD) also rose 8.6% to $1.71K, although both tokens still have a long way to go to reach their respective November 2021 highs.[0]
Mike Novogratz, a supporter of cryptocurrency, believes there is a high possibility that Bitcoin will reach back to $30,000 by the end of the upcoming month, a much lower prediction than the one of $500,000 he had initially proposed. However, this would still be a 25% rise from its current cost.[2]
The crypto market capitalization rose by 6.9% within a 24-hour period, reaching US$1.10 trillion, the highest level since the middle of August. Additionally, the total trading volume increased 7.9% to US$63.61 billion.[3] Flows into bitcoin have been driving the gains, as investors become more optimistic and move away from altcoins.[4] Bitcoin’s market dominance is steadily growing, as it is the only cryptocurrency that has been labeled as a “commodity” by the chair of the SEC.[5]
The gains follow the release of January’s Consumer Price Index that showed prices rose 0.5% for the month and 6.4% year-on-year.[6] The figures were higher than the predicted 0.4% monthly increase and 6.2% yearly increase, yet they do demonstrate that inflation has been steadily decreasing over the past several months in the world’s largest economy.[3]
Some of the optimism may have come from softer-than-feared comments from the SEC, but it appears that the rally was concentrated in Bitcoin and Ethereum, as other tokens remained underwater when compared to prices seven days ago.[7]
The rally was also driven by investors liquidating almost US$70 million of mostly short-position bets, according to data aggregator GlassNode.[8] Short positions, or bets the price of Bitcoin would fall, had grown following a series of U.S. regulatory crackdowns this month on crypto services.[8]
0. “Bitcoin pops to highest in six months as regulatory crackdown fears ebb” Seeking Alpha, 16 Feb. 2023, https://seekingalpha.com/news/3937311-bitcoin-pops-to-highest-in-six-months-as-regulatory-crackdown-fears-ebb
1. “Bitcoin touches $25,000 for first time since August as 2023 crypto rally continues” Yahoo News, 16 Feb. 2023, https://news.yahoo.com/bitcoin-touches-25000-for-first-time-since-august-as-2023-crypto-rally-continues-181615592.html
2. “Galaxy Digital CEO Novogratz Sees Chance of Bitcoin (BTC) Hitting $30000” Bloomberg, 15 Feb. 2023, https://www.bloomberg.com/news/articles/2023-02-15/novogratz-sees-chance-of-bitcoin-hitting-30-000-this-quarter
3. “Markets: Bitcoin, Ether, other major tokens rise despite hotter-than-expected CPI reading” Yahoo! Voices, 15 Feb. 2023, https://www.yahoo.com/now/markets-bitcoin-ether-other-major-020804763.html
4. “Bitcoin price rally fails to turn derivatives traders bullish, here’s what to expect” FXStreet, 16 Feb. 2023, https://www.fxstreet.com/cryptocurrencies/news/bitcoin-price-rally-fails-to-turn-derivatives-traders-bullish-heres-what-to-expect-202302161157
5. “Bitcoin rises despite U.S. crackdown, as crypto market gains $84 billion in value” CNBC, 16 Feb. 2023, https://www.cnbc.com/2023/02/16/bitcoin-btc-price-surges-as-crypto-market-gains-84-billion-in-value.html
6. “Bitcoin breaks $25K for first time since mid-2022, some hail thaw of crypto winter” Fortune, 16 Feb. 2023, https://fortune.com/crypto/2023/02/16/bitcoin-ethereum-price-rally-0216-ordinals-inflation
7. “Bitcoin risks getting stuck near $25K” ForexLive, 16 Feb. 2023, https://www.forexlive.com/Education/bitcoin-risks-getting-stuck-near-25k-20230216
8. “Bitcoin breaches US$24,000 to reach highest price since August as short sellers liquidated” Yahoo Life, 16 Feb. 2023, https://www.yahoo.com/lifestyle/bitcoin-breaches-us-24-000-022519727.html