Reporter | Si LinweiOn the early morning of January 30th, market data showed that Bitcoin prices approached the $24000 level at one point, with the highest quote reaching $23960, a 24-hour increase of 2.2%, and a 7-day increase of 3
Reporter | Si Linwei
On the early morning of January 30th, market data showed that Bitcoin prices approached the $24000 level at one point, with the highest quote reaching $23960, a 24-hour increase of 2.2%, and a 7-day increase of 3.8%, setting the 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%.
The recent recovery of the cryptocurrency market is closely related to the pace of interest rate hikes by the Federal Reserve. At the upcoming FOMC meeting, the Federal Reserve will announce its interest rate decision at 3am Beijing time on Thursday, February 2nd. The market generally expects the Federal Reserve to raise interest rates by 25 basis points. Federal Reserve Chairman Powell will hold a monetary policy press conference at 3:30 pm on the same day.
On January 19th, Federal Reserve Vice Chairman Brainard stated that it is likely to raise the benchmark interest rate by another 25 basis points on February 1st, raising the target range to 4.5% -4.75%. On January 20th, Philadelphia Federal Reserve Chairman Huck also reiterated his support for a 25 basis point interest rate hike, so a 25 basis point interest rate hike at the February interest rate meeting has basically become a consensus in the market. Many analysts believe that the Federal Reserve will end its tightening cycle after raising interest rates by 25 basis points each in the next two policy meetings, and may then maintain interest rates unchanged for at least the rest of this year. The CMEFedWatch tool gives a probability of a 25 basis point increase of 98.4%.
In 2022, the Federal Reserve raised interest rates a total of 7 times, totaling 425 basis points, ultimately raising the target range of the federal funds rate to 4.25% -4.50%. At the last interest rate meeting in December 2022, the Federal Reserve slowed down the rate hike by 50 basis points. Against the backdrop of tight liquidity, Bitcoin experienced a decline of over 65% in 2022, ranking last among major global asset classes.
It is not clear whether the Federal Reserve will stop raising interest rates after entering 2023. On January 27, data from the United States Department of Commerce showed that the core PCE price index rose 4.4% year-on-year in December 2022, in line with expectations, and continued to fall from the previous value of 4.70%, the smallest increase since October 2021. PCE is a key indicator of inflation, and the latest changes provide the latest evidence of economic cooling, although it also indicates that service sector inflation remains resilient.
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