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Bitcoin As traders bet on a US inflation cooldown and digested news that lawyers at the defunct cryptocurrency exchange FTX found billions of dollars worth of assets, raising user hopes, traders announced Thursday about It soared to its highest level in a month.
The world’s largest digital currency surpassed $18,000 for the first time since late Wednesday, December 14, gaining almost 5% in value over the past 24 hours. Bitcoin was trading at $18,164.80 as of 2:30 am ET on Thursday, according to data from CoinMetrics.
On Wednesday, lawyers for the collapsed cryptocurrency exchange FTX said they found about $5 billion in “liquid” assets, including cash and digital assets. After the collapse of crypto exchanges in November, the recovery will be a welcome boon for FTX customers.
Nonetheless, FTX lawyers warned that $5 billion in cash was so high that selling the asset could put significant downward pressure on the market and reduce its value.
“Bitcoin has been on a downward trend for more than a year, which is a typical period for a cryptocurrency bear market,” Vijay Ayyar, vice president of corporate development and international at crypto exchange Luno, said Thursday. told CNBC in an email this morning.
“There have been a number of negative events over the past year, and when we look at how prices react to these events, we generally see smaller declines. It shows that there is more selling pressure, it is being absorbed and moving into the accumulation phase,” he added. “This could also mean that the market thinks the worst of cryptocurrency is over and is priced in for the most negative news.”
US inflation data due Thursday are expected to show a softening in inflation. Economists surveyed by Dow Jones expect the consumer price index to fall 0.1% month-on-month in December.
Inflation is still expected to rise by 6.5% y/y, down from November’s 7.1% rise and well below June’s peak of 9.1%. Investors hope the fall will put pressure on the Federal Reserve to reverse interest rate hikes.
The Federal Reserve (Fed) and other central banks have raised interest rates over the past year or so in an effort to curb surging inflation. The move led to a sharp decline in stocks and cryptocurrencies in 2022.
The current expectation is for the central bank to cut interest rates and ease the pressure on risk assets.
“Today’s CPI numbers are very suggestive, and a CPI hotprint could definitely throw a spanner into the work of risk-on assets such as crypto.
That, or more negative news in cryptocurrencies, could push Bitcoin price below $17,000, Ayyar warns, with further declines, digital assets likely to fall within $12,000 to $14,000 range I warned you that there is potential.
Bitcoin is down about 74% from its November 2021 high of $68,990. Last year, about $1.4 trillion of value was lost from the cryptocurrency market as traders dumped risky assets such as technology and growth stocks.
Bitcoin and the broader digital currency market also fell, suggesting a stronger correlation with major stock benchmarks such as the Nasdaq Composite.
The plunge was also caused by crypto-specific issues such as the collapse of projects and companies such as FTX and Terra.
Other digital currencies were helped by Thursday’s surge in Bitcoin price. Ether, the second largest coin, rose 5% to $1,401.18, while his BNB token on Binance rose 3% to $285.37.
Binance CEO Changpeng Zhao told CNBC on Wednesday that the exchange plans to increase employment by 15% to 30% in 2023.
Binancey itself, which allocated $1 billion to a fund aimed at propping up the industry after the FTX collapse, has also been plagued by concerns about the health of its reserves. Mazars, an auditor working on the company’s so-called proof of reserves, suspended all work with cryptocurrency firms in December.
Binance says it has enough assets to cover its debt.