The largest cryptocurrency by market capitalization, Bitcoin BTC/USD has broken above the psychologically significant $21,000 barrier. Saturday’s move brought joy to subdued markets, which were rocked by the collapse of several high-profile companies, including cryptocurrency exchange ftx FTT/USD.
The rally in prices of major cryptocurrencies such as Polygon MATIC/USD and Solana SOL/USD and memecoins like Dogecoin DOGE/USD and Shiba Inu SHIB/USDis fueled by optimism that digital currencies may have bottomed out.
This is the first time since November 8, 2022 that Bitcoin has crossed $20,000 after 11 consecutive days of upward movement.
Other notable cryptocurrencies such as Ethereum ETH/USD and Cardano ADA/USD also saw substantial gains, pushing the total market cap of the cryptocurrency market above $1 trillion for the first time since November.
The current spike in Bitcoin’s value comes after the Labor Department released data showing top-line inflation rose 6.5% in December, up from 7.1% in November.
On Thursday, Federal Reserve policymakers expressed their relief that inflation continued to fall in December.
Bear market not over yet
Annie LianChief Digital Advisor, of the Mongolian Productivity Organization, tells Benzinga that investors should take a cautious stance and not get too optimistic about the digital currency.
“This does not mean that the bear market is over. First, the lack of Bitcoin trading volume around $18,000 and RSI shows that bitcoin is overbought, showing that the rally could be short-lived. Second, the massive layoffs by the crypto companies and the new indictments from the SEC Genesis and Twin for the unregistered offering and sale of crypto asset securities, it seems like it would take longer to see a real sustainable bull run,” he says.
He added that Bitcoin and other cryptocurrencies are more responsive to macroeconomic changes and shifts than stocks and that we are currently witnessing such a shift.
“I see more investors putting in more capital this week. Overall, this is still a positive sign for the market,” he added.
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Mainstream adoption will lead to greater stability
According to Scott Trippa member of redecentralise.com, a not-for-profit organization, Bitcoin’s increasing mainstream adoption and institutional adoption will lead to more stability in the price over time, the current rally is driven by speculative mania and may not be sustainable in the long term.
Bitcoin may rise further in 2024
Raj A Kapoorthe founder of India Blockchain Alliance, predicts that 2024 could be the year when Bitcoin experiences a significant price increase as a result of the halving.
According to Kapoor, this event could be responsible for the current positive sentiment and upward trend in Bitcoin’s value.
“I also feel that major investors or Bitcoin Whales have resumed their Bitcoin holdings. The big Bitcoin whales hold between 1,000 and 10,000 BTC in their wallets, according to data from Santimen which clearly indicates that investors have been stocking up on Bitcoin, which could be a hint of a recovery in Bitcoin’s price,” added Kapoor.
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