Bitcoin clears $17,000 for the first time in 3 weeks as Fed jitters ease

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By Ambar Warrick

Investing.com — Bitcoin prices surged above $17,000 for the first time since mid-December on Monday, driving gains in broader cryptocurrency markets as traders bought into the space on growing expectations that the Federal Reserve will soften its hawkish stance this year.

The world’s largest cryptocurrency rose 1.7% to $17,235.3 as of 00:26 ET (0526 GMT), helped by dollar weakness after nonfarm payrolls data released on Friday showed that the US job market was cooling. This gives the Federal Reserve less economic leeway to raise interest rates at a sustained pace.

World no. 2 cryptocurrency Ethereum also hit a more than three-week high, rising 4% and breaking above the $1,300 level for the first time since mid-December.

The prospect of a slower interest rate hike by the Fed is a big relief for the cryptocurrency market, which has fallen in value through 2022 as the Fed’s monetary tightening has ended. two years of ultra-accommodative policy from which space benefited. This sharp drop in value also triggered a string of high-profile bankruptcies, which the crypto market is still reeling from.

This week, the focus is also on US inflation data due on Thursday. Signs of easing price pressures could give the Fed more impetus to curb its hawkish rhetoric.

But even though Bitcoin should benefit from a less hawkish Fed, the cryptocurrency is trading at a fraction of the highs reached in 2021. The cryptocurrency fell 65% in 2022, a drop that called into question its proposed status store of value, a currency, or even a hedge against inflation.

This steep decline in value, coupled with a string of high-profile crypto bankruptcies in 2022, has also soured retail investors towards cryptocurrencies in general.

Space has lost more than two-thirds of its value in 2022 and has so far struggled to come back in the first trading week of the year.

Yet past cycles have shown that cryptocurrency bulls only occur during periods of accommodative monetary policy. With the Fed now set to ease its hawkish stance this year and potentially pause its rate hike cycle later this year, crypto could see some strength in 2024.

The story continues

But it remains to be seen whether the space will be able to recover from a blow to retailer sentiment and the potential tightening of regulations.

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