Bitcoin fell from an all-time price high of close to $69,000 in November 2021 to below $16,000 in November 2022
The price of bitcoin is up by almost a third since the start of the year, leading to speculation that the prolonged ‘crypto winter’ is finally beginning to thaw.
The world’s leading cryptocurrency was trading above $21,000 on Thursday, pushing its market cap higher than $400 billion for the first time since November.
The price of bitcoin is up by almost a third since the start of the year, leading to speculation that the prolonged ‘crypto winter’ is finally beginning to thaw.
The world’s leading cryptocurrency was trading above $21,000 on Thursday, pushing its market cap higher than $400 billion for the first time since November.
The latest gains come amid easing inflation and signs that the US Federal Reserves will slow interest rate rises over the coming months, leading to improved sentiment and an increased appetite for riskier assets like cryptocurrencies.
Ethereum (ETH), Ripple (XRP), Cardano (ADA) and Solana (SOL) have also seen significant gains in recent weeks, pushing the overall crypto market cap back towards $1 trillion.
Despite the turnaround in fortunes, the global crypto currency market remains a long way off its peak of close to $3 trillion in November 2021.
The upward momentum saw short sellers lose hundreds of millions of dollars in the space of just a few days, according to a report from crypto investment service BitStacker.
Those betting against bitcoin lost $386.74 million in liquidations between 10 to 16 January, the analysis found, with more than $140m lost on just a single day.
“While it’s always sad to see traders losing money on their investments, the study does show that cryptocurrencies might finally be bouncing back,” said BitStacker analyst Kris Lucas
2022 was a very tough year for cryptocurrencies with the collapse of several major exchanges, as well as the Terra stablecoin. However, the fact that bitcoin is starting to regain its value could suggest that the so-called crypto winter could soon be over.”
A mini flash crash on Wednesday, which saw BTC drop by $1,000 in the space of an hour, demonstrated that the recovery is still in the fragile early stages, and could easily be shaken by some negative news.
The price dip came after the US government announced a press conference for some major crypto-related news, leading to fears that it could be damaging for the crypto space. The news turned out to be the dismantling of a crime network, and the price returned to a positive trajectory.
The stalled rally showed that it is too soon to know whether or not bitcoin has reached its lowest price point this cycle, though it is the most positive move for the crypto market in nearly a year.
Favourable market conditions could see bitcoin begin to recapture some of its losses in 2023, according to Nigel Green, CEO of financial advisory firm deVere Group, who cites US inflation data in his forecast for the year ahead.
“We are technically still in a bear market, but the signs are the bulls are beginning to take back control,” Mr Green told The Independent.“As the central banks begin to stop tightening the screws, and the cyclical upturn gets underway, cryptocurrencies such as bitcoin could outperform other asset classes. Knowing they are likely to be rewarded for doing so, many crypto investors are positioning themselves now for the pivot.
“The ‘crypto winter’ is thawing amid growing signs that inflation is beginning to cool. Of course, the crypto market will not go in a straight line – no market ever does – but we expect the bears to go into hibernation and bulls are ready to run.”
