Bitcoin Barrels Towards Historic January As Crypto Market Jumps $280 Billion

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(Bloomberg) — Bitcoin is poised for its best January since 2013 on bets that monetary tightening and the crypto sector crisis are both easing.

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The largest token is up over 40% year-to-date, a first-month gain bettered only twice before when the crypto was in its infancy. Smaller coins like Solana, Axie Infinity, and Decentraland doubled in value, part of an overall January $280 billion increase in digital assets, according to figures from CoinGecko.

The rebound from last year’s deep rout is part of a broader revival in risk appetite on expectations that central banks will slow interest rate hikes and perhaps even cut costs borrowing later this year as high inflation moderates.

The rally in virtual coins weathered the continued fallout from the collapse of the Sam Bankman-Frieds FTX exchange, such as the bankruptcy of crypto lender Genesis Global Holdco LLC and a series of industry layoffs.

January looks like a month of new beginnings, with clarity emerging on bankruptcy proceedings, corporate restructurings and market fundamentals indicating that the bottom is behind us, wrote Noelle Acheson, author of the Crypto Is Macro Now newsletter. .

Still, many skeptics doubt the rally in crypto and tech stocks will last. One risk is that the economic soft landing markets are hoping for is whimsical because rates need to stay higher for longer.

The comeback of speculative assets like Bitcoin and the Ark Innovation ETF will likely reverse if oil, wages and consumer price increases temporarily turn the soft landing narrative in the coming weeks into a no-holds-barred sight. landing, said strategists at Bank of America Corp. directed by Michael Hartnett. Last week.

The story continues

Federal Reserve Chairman Jerome Powell could also remind investors that officials plan to keep rates high for some time. He is due to speak after an expected Fed downgrade to a quarter-percentage-point hike this week.

Some corners of the world markets also issue flashing warnings. For example, hedge funds have constructed the biggest ever bearish bet on bond futures, clashing with the narrative that a peak in rising rates is near.

For now, momentum is king. Rick Bensignor of Bensignor Investment Strategies targeted $25,000 for Bitcoin in a note on Monday, a level last seen in August.

Bitcoin was down slightly by around 1% at $23,640 as of 11:30 a.m. in Tokyo on Monday. It’s on track for the best month since December 2020. Ether, the second-largest token, held steady at around $1,635.

For crypto market prices: CRYP; for the best crypto news: TOP CRYPTO.

–With help from Sunil Jagtiani.

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