The market's expectation of inflation peaking and the Federal Reserve's imminent slowdown in interest rate hikes has temporarily lifted cryptocurrencies from the shadows.As of January 14th, Bitcoin has risen for 11 consecutive days, soaring over $21000
The market's expectation of inflation peaking and the Federal Reserve's imminent slowdown in interest rate hikes has temporarily lifted cryptocurrencies from the shadows.
As of January 14th, Bitcoin has risen for 11 consecutive days, soaring over $21000. In January, it rose by over 23%, reaching a new high since November and the longest consecutive days of gains since 2020.
The second largest cryptocurrency, Ethereum, rose by a whopping 9.7%, with a cumulative increase of over 26% this month. According to CoinGecko's data, the total market value of cryptocurrencies has exceeded $1 trillion for the first time since early November.
Meanwhile, the stock price of Coinbase, the largest currency exchange in the United States, rose by over 40% this week, while Bitcoin mining company MarathonDigitalHoldings surged by 76%.
From the stable currency project terraUSD to the cryptocurrency exchange FTX, there have been consecutive thunderstorms,Bitcoin has fallen 64% since the beginning of last year, erasing its market value of over $1.3 trillion, its second worst performance on record. The collapse of FTX has also caused huge losses to retail investors and institutions.
Wall Street News mentioned earlierPrior to this breakthrough, the price of Bitcoin remained unusually calm, fluctuating between $15770 and $17350.
Media analysis suggests that the optimistic sentiment in the market that the Federal Reserve is about to suspend interest rate hikes has driven the rise of Bitcoin. This week, the US CPI growth slowed down for the third consecutive month in December, making the market more confident that the Federal Reserve is on track to stabilize and slow down interest rate hikes, driving Bitcoin higher.
The currency crisis may not be over yet
But has cryptocurrency really bottomed out? Analysis has pointed out that the crisis in the coin circle is still fermenting: some companies are going bankrupt, some companies are laying off large numbers of employees, and they are also facing the problem of "fewer people" and "fewer coins".
Due to the collapse of FTX, on January 5th Genesis Trading, a cryptolending institution, will lay off 60 employees, accounting for 30% of its total workforce, and will apply for bankruptcy protection. On the same day, Yinmen Capital announced the layoffs of 40% of its employees, approximately 200 employees, and stated that it would reduce its business. On January 10th, Coinbase, the largest currency exchange in the United States, will lay off 20% of its workforce, approximately 950 people, to further control operating costs.
Owen Lau, an analyst at Oppenheimer, commented that Coinbase's new round of layoffsThe transaction volume originating from cryptocurrency is still very low KeefeBruyette& Analysts at Woods commented that the new action will help mitigate the challenging environmental impact on Coinbase, but may not turn the company back into a profit.
Wall Street News mentioned earlier
According to Glassnode's data, due to the high leverage nature of the coin circle,The sharp fluctuations in currency prices in 2022 forced many investors to exit their long-term positions
Jacob Sansbury, co founder of Pluto, a retail service company, pointed out that in order to repay the debt problem caused by the previous decline in currency prices,Many sellers holding highly leveraged positions are exiting the transaction, and sellers are continuously decreasingSansbury said:
The question we need to ask ourselves now is: Are there any sellers in this market? In my opinion, there isn't that much anymore.
Most highly leveraged investors have gradually withdrawn, and they typically own a large amount of Bitcoin.
According to data from Coinglas, the number of Bitcoins available for sale in the Bitcoin market has also declined in 2022: the exchange's Bitcoin holdings were 1.97 million, a significant decrease from 2.33 million at the beginning of the year.
Media analysis suggests that in the future, Bitcoin will also face three major challenges: increasing mining costs, potential risks from the world's largest cryptocurrency fund, the Grayscale Bitcoin Trust (GBTC), and the possibility of a significant increase in benchmark interest rates.
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