Edited by: Bi LumingData shows that Bitcoin has risen by 40% this year, while Ethereum has risen by more than 30%.
Edited by: Bi Luming
Data shows that Bitcoin has risen by 40% this year, while Ethereum has risen by more than 30%... Can the January frenzy continue in February? As of press release, Bitcoin has exceeded $24000 per piece and is currently priced at $24198. According to Wind data, since the beginning of 2023, Bitcoin has ranked first in global asset performance with a 42.92% increase.
According to publicly available data,The cryptocurrency on the entire network sold out $44.01 million in one hour and $231 million (approximately RMB 1.554 billion) in 24 hours. In the past 24 hours, a total of 44103 people sold out.
It is worth mentioning that on the early morning of February 2nd Beijing time, the Federal Reserve announced its first rate hike of 25 basis points for the year, raising the target range of the federal funds rate to 4.50% -4.75%. It is the highest level since October 2007.
Fierce rebound of cryptocurrency
On February 1st, market data showed that the price of Bitcoin briefly approached the $24177.55 level, rising by over 4% on the day, reaching its highest price since August 2022. Meanwhile, according to Wind data, since the beginning of 2023, Bitcoin has ranked first in global asset performance with a 42.92% increase.
In 2023, the cryptocurrency market maintained a relatively strong trend, with a total market value soaring from $820 billion to $1.09 trillion, an increase of 33%. In addition to Bitcoin, which has the largest market value, the price of Ethereum, the world's second largest cryptocurrency, has also skyrocketed, breaking through the $1200 mark at the beginning of the month to the $1600 mark, rebounding by over 30%.
In addition to cryptocurrencies, stocks related to the market have also rebounded from last year's sharp decline. Since the beginning of this year, the shares of CoinbaseGlobal, a cryptocurrency exchange, have surged 65%, setting the company's best monthly performance since its listing the year before last. The crypto mining stock index recorded an unprecedented monthly increase of 77%.
According to a report by the Financial Associated Press on the 1st, VetleLunde, a senior analyst at Arcane Research, wrote in a report that the cryptocurrency market's expectations for a rapid shift in Federal Reserve policy may be overly optimistic, with many unfavorable factors such as slower upward momentum, strong technical resistance, and the Fed's hawkish attitude, which may make the market's performance in February unsatisfactory.
Arcane Research stated that an analysis of recent fluctuations in Bitcoin indicates that the large-scale upward trend in Bitcoin triggered by the previous Federal Reserve interest rate meeting is fading. But this institution does not deny the possibility of relative optimism.
It is worth mentioning that the encryption industry has recently launched a layoff model. According to Cailian News on February 2nd, ChainAlysis, a cryptocurrency industry company, announced that it has made some layoffs, but only affected less than 5% of its employees.
On January 25th, the cryptocurrency exchange Luno planned to lay off 35% of its global employees, becoming the latest company in the industry to announce layoffs. It is reported that the total number of employees in Luno is about 960, which means that over 330 job positions will be affected. Luno stated that the company's layoffs were affected by the turmoil in the entire cryptocurrency market last year.
According to a report from the Chinese website of the Wall Street Journal on January 16th, Crypto.com (hereinafter referred to as Crypto), a cryptocurrency exchange, will lay off one-fifth of its employees globally after many cryptocurrencies depreciate and competitors crash, marking the company's second round of layoffs in six months.
According to Interface News, citing the Wall Street Journal on December 1, 2022, Kraken, a cryptocurrency exchange, stated that the company plans to lay off approximately 1100 employees, accounting for 30% of the total workforce.
Powell: Don't expect interest rate cuts in 2023
The recent recovery of the cryptocurrency market is closely related to the pace of interest rate hikes by the Federal Reserve. This rate hike marks the first time the Federal Reserve has raised interest rates in the New Year. Previously, in 2022, the Federal Reserve had raised interest rates seven times, with a cumulative increase of 425 basis points. Along with this, the Federal Reserve has raised interest rates by a total of 450 basis points since last year. FOMC pointed out in its policy statement that recent indicators show moderate growth in both consumption and production. In recent months, employment growth has been strong, and the unemployment rate has remained low; Although inflation has eased somewhat, it is still at a high level.
"The Russia-Ukraine conflict has had a huge impact and exacerbated global uncertainty. The FOMC is highly concerned about inflation risks. The FOMC expects that it will be appropriate to continue to raise interest rates. Inflation will recover to 2% over time. When determining the future rate increase, the FOMC will consider the cumulative tightening of monetary policy, the impact on economic activities, and the degree of inflation lag." The FOMC added in the statement.
CNBC reported that the market is more concerned about signs of the Federal Reserve suspending interest rate hikes than lowering the single rate hike to 25 basis points. However, this policy statement did not send the signal that the market hoped to see.
On February 1st local time, Federal Reserve Chairman Powell held a press conference after the Fed announced a 25 basis point interest rate hike, stating that although current data shows,The inflation in the United States has eased somewhat, but it is still far from reaching its target. The Federal Reserve will continue to raise interest rates and is firmly committed to reducing inflation.
Image source: Visual China
Powell stated that the current inflationary tightening seen has not come at the cost of sacrificing the labor market, but the US economic situation is still in the "early stages" of easing inflation, "the work is not yet fully completed", and the Federal Reserve has not yet adopted a "sufficiently strict policy stance".Powell also stated in response to reporters' questions that it is "definitely possible" for the federal funds rate to remain below 5%, but do not expect a rate cut in 2023.
Powell stated that he is confident that the inflation rate can fall back to 2% without a serious economic recession or a significant increase in unemployment.
However, a reporter from the Daily Economic News noticed that traders in the futures market have begun to bet that the Federal Reserve will suspend interest rate hikes at the next meeting - as of 3:40 Beijing time on February 2, the "Federal Reserve Watch" tool of the Chishang Exchange shows that the futures market believes that the probability of the FOMC raising interest rates again by 25 basis points to 4.75%~5.00% at the March 22 meeting is 82.5%, the probability of suspending interest rate hikes is 17%, and there is even a 0.5% possibility of a 25 basis point cut.
The futures market's bet on the Federal Reserve suspending interest rate hikes is not groundless - since the rate hike in December 2022, multiple inflation indicators in the United States have shown a continuous downward trend.
The key points of the Federal Reserve's FOMC statement and Powell's press conference are listed as follows:
FOMC Declaration:
1. The committee believes that continuous interest rate hikes are appropriate and is considering the "degree" of future interest rate hikes.
2. The committee believes that although inflation has eased somewhat, it is still at a high level and attaches great importance to the risk of inflation.
3. The committee believes that employment growth is strong and the unemployment rate remains low.
4. The Committee believes that it will continue to reduce its holdings of US treasury bond bonds and mortgage-backed securities as planned.
Powell's speech:
1. We are discussing raising interest rates a few more times to reach an appropriate restrictive stance, which is not far from this level; If the economic situation meets expectations, it is not expected to lower interest rates in 2023; If it is necessary to adjust the rate hike to the level before December, the Federal Reserve will do so.
2. The Federal Reserve is firmly committed to achieving the inflation target of 2%; The comprehensive impact of rapid monetary policy tightening has not yet been apparent; Federal Reserve officials still have more work to do.
3. Inflation is still far above the target, and the past three months of inflation have shown a welcome slowdown, but more evidence is needed to confirm that inflation has cooled.
4. Many indicators indicate that the US job market is still strong; JOLTS job vacancy data may be an important employment indicator; There are no signs of weakness in the labor market.
5. There is a path that can reduce inflation to 2% without experiencing a significant economic recession; The US economy still has the possibility of achieving a soft landing.
Daily Economic News, Comprehensive Finance News, China New Economic News, Interface News, and Every Economic Network
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