Cryptocurrencies rally in early 2023 as bitcoin prices recover

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If the first weeks of 2023 are a harbinger of what’s to come for cryptocurrency investors, then they may have reason to be overflowing with optimism. The vast crypto market is rallying behind bitcoin’s price recovery as the crypto major surges above $23,000.

The broad crypto market in 2022 suffered like the rest of the markets, namely stocks and bonds, following both asset classes in a downward trend amid inflation fears. This, of course, challenged cryptocurrencies as a viable asset uncorrelated to traditional financial markets.

Bitcoin recently surged above $23,000 after falling below $16,000 in 2022 on hopes that the Fed will slow the pace of its rate hikes as 2023 unfolds. With that, the correlation with stocks and bonds occurs again as both asset classes rise with the price of bitcoin as well as the broader crypto market.

Fed tightening appears to be milder and inflation less risky, Charles Hayter, CEO of crypto data site CryptoCompare, said in a CNBC report. Hopefully there will be more caution in rate hikes globally.

Is the collapse of FTX already taken into account?

The collapse of cryptocurrency exchange FTX last year could have put the proverbial nail in the coffin of cryptocurrency weakness in 2022. The recent collapse of the investment firm’s lending arm New York-based crypto Genesis, which was looking to protect itself from bankruptcy, should have added additional weakness, but it appears to have already been factored in.

Either that or the general bullish momentum in the market is so strong that investors are simply shrugging off this latest meltdown. Be that as it may, the bankruptcy of Genesis has not yet undermined investor confidence.

The Genesis debacle has been going on for a while and is likely already factored in. FTX, on the other hand, has already had a significant impact on many investors, on the psychology of the market, and on the prices of several toxic assets, said Mati Greenspan, founder and CEO of crypto investment advisory firm Quantum Economics, in a CNBC report.

It should be noted, however, that the price of bitcoin itself is quite constrained since FTX did not have any on its balance sheets, Greenspan added.

That said, bitcoin and other cryptocurrencies are still subject to volatile market movements, so new investors considering digital assets in 2023 should still exercise caution. Upcoming big tech earnings could confirm crypto moves with the broader stock market and see big price swings.

Bitcoin could test its August high and be supported at the $20,000-$21,000 level, but with its RSI divergence and some big tech gains coming this week, it could get quite choppy, Bitcoin analyst Yuya Hasegawa said. crypto market at Japanese bitcoin exchange Bitbank.

For more news, insights and analysis, visit the Crypto Channel.

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