Bitcoin is trading at $23,000 after hitting a 5-month high

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Bitcoin got off to a spectacular start in 2023. dreamtime

Bitcoin and other cryptocurrencies rose on Thursday, returning to highs hit in prior trades that hadn’t been seen in more than five months. Analysts are eyeing $25,000 as the key level with major macro catalysts expected in the coming day and Friday.

The price of Bitcoin has risen 2% in the past 24 hours to $23,000. The biggest digital asset surged above $23,700 late on Wednesday, the highest levels since the start of last August, before falling back as Bitcoin now heads higher and ready for more action.

As January’s crypto rebound maintains momentum, Bitcoin and Ethereum posted a third straight week of gains, both up more than 30% year-to-date, crypto exchange analysts wrote on Wednesday. Coinbase Global (ticker: COIN). While some market analysts are beginning to believe that the worst of the crypto downturn may be behind us, others are much more hesitant about a hot start for cryptos in 2023.

It was a blistering start to the year for digital assets, which rallied above levels not seen since the bankruptcy of crypto exchange FTX in November rocked markets. Cryptos led risk-sensitive assets higher, with the Dow Jones Industrial Average and S&P 500 also recording gains as investors grew more optimistic about slowing inflation and that the Federal Reserve’s monetary policy will become less aggressive.

Fourth-quarter U.S. gross domestic product (GDP) data due later Thursday and the Personal Consumption Expenditure (PCE) index release on Friday will add color to the economic picture, providing the next catalysts for cryptocurrencies. currencies and stocks. The two asset classes have become correlated over the past year amid high inflation and rising interest rates, dampening demand for riskier bets.

A warmer than expected GDP reading could reinforce the narrative that the economy remains strong enough to withstand more interest rate hikes from the Fed, which would be bad for cryptos. While a colder-than-expected print could fuel recession fears and also lead to declines, it would also raise the prospect of a more dovish Fed as the central bank remains committed to tackling inflation without causing an economic slowdown.

Cryptos are likely to move both ways: $25,000 is a key level to watch after digital assets fell on Wednesday after Bitcoin hit its highest price in nearly six months, just below 24,000 $. One analyst said: Don’t get too excited.

Yesterday’s decline can be seen as a technical correction from the January 19th momentum, opening the way to $25,000, said Alex Kuptsikevich, analyst at broker FxPro. However, it is more likely that the renewal of the six-month highs was a false break as trading has mostly been in the $22,700-23,300 range since Saturday, reflecting continued profit taking.

Analysts remain more widely divided on the recent crypto rally. Some market participants are calling it the turning point of a brutal bear market that has seen Bitcoin prices plummet by around two-thirds in just over a year. Other voices say that low liquidity in a depressed market has exacerbated price swings, meaning the gains are more the result of technical factors that could reverse than a true uptrend.

Beyond Bitcoin, Ether is the second largest cryptorose 4% over $1,600. Smaller cryptos or altcoins were also in the green, with Cardano and Polygon gaining 5%. Memecoins were also strong, with Dogecoin and Shiba Inu each up 3%.

Write to Jack Denton at [email protected]

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