Bitcoin surges above $21,000 on inflation optimism

Bitcoin surged above $21,000 ($30,000) on Saturday amid optimism that it may have bottomed and inflation has peaked.

The largest cryptocurrency surged as much as 7.5 percent to $21,299 before depreciating throughout the day. It hadn’t been more than $20,000 since November 8, and Saturday was the 11th straight day of advances. The second-largest token, Ether, is up as much as 9.7 percent, and others like Cardano and Dogecoin also saw gains. Solana rose up to 35 percent.

According to data from CoinGecko, the total market cap of the crypto universe surged above $1 trillion for the first time since early November.

Bitcoin started 2023 with a bang.

Bitcoin started 2023 with a bang.Credit:Getty

“It’s been steadily increasing since the beginning of the year,” said Cici Lu, chief executive officer of Venn Link Partners. “Feels like we’ve hit an ‘air pocket’ of supply and the break of the $20,000 resistance has taken out a few stops. Visually, $20,000 is a key level for many.”

Short-term inflation expectations in the US fell to their lowest level in almost two years in early January, boosting consumer sentiment more than expected, according to preliminary results from the University of Michigan survey. A separate report showed that US consumer prices rose 6.5 percent in the 12 months to December, the lowest inflation rate in more than a year.

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The US Federal Reserve is on track to resort to smaller rate hikes as prices continue to cool, although it is likely to rise further until pressures show clearer signs of slowing. That has helped boost risky assets like the Nasdaq 100 stock index, which has risen for six straight days.

“Cryptoassets have performed well after soft CPI pressure, suggesting that crypto’s correlation with macro is not going away anytime soon,” said Sean Farrell, head of digital asset strategy at Fundstrat.

“The continuation of price action this week is certainly encouraging,” and barring forced liquidations by struggling crypto firm DCG, “there is a strong possibility that the all-time bottom in crypto prices has been reached.”

https://www.smh.com.au/business/markets/bitcoin-surges-above-us21-000-amid-optimism-around-inflation-20230115-p5cckx.html?ref=rss&utm_medium=rss&utm_source=rss_business Bitcoin surges above $21,000 on inflation optimism

Brian Lowry

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