Bitcoin entered 2023 with a gain of more than 28%, adding to the tension of the bears, who were expecting new problems for riskier investments after a sharp sell-off in 2022.
The biggest rise in cryptocurrencies in the world so far is the best for the first month of the year since the 31% rise in 2020 before the start of the pandemic.
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Data from CoinGecko showed that this increase helped lift the total value of digital assets above $1 trillion, a level that disappeared in November when the FTX exchange collapsed.
Bitcoin was up 2.5% on Monday and traded at $21,230, its 13th straight daily rise. Smaller coins like ether and cardano were also in the green zone.
Asian cryptocurrency-related stocks such as Monex Group and Woori Technology Investment Co. also rose.
The rise in cryptocurrencies is partly a bet on the end of the rise in interest rates, a possibility that has also fueled the rise in stocks, bonds and gold. However, investors are wondering if all these assets have moved too quickly, given that central banks such as the Federal Reserve are committed to maintaining high interest rates until still-high inflation is wiped out, according to Bloomberg. and I saw it. , Al Arabiya.no.
Crypto expert and author of Cryptography is a Macro Now, Noel Acheson, agrees that there is a lot of uncertainty around digital assets and believes that the current rise could be driven by a so-called “short squeeze.” which may fade quickly, but the fear of missing out or FOMO may play a role in how the market develops from its current areas.
Caution is needed at this time as the cryptocurrency industry continues to prepare for further fallout from the FTX bankruptcy and subsequent fraud allegations against co-founder Sam Bankman Freed. Cryptocurrency broker Genesis and its parent company Digital Currency Group are also looking to address debt issues, which could lead to market turbulence.
Meanwhile, some technical indicators suggest that Bitcoin’s surge has dragged on. A symbol’s 14-day RSI – a measure of momentum – rose to 90. This is well above the 70 level, which is considered “overbought” and is the highest in about two years.
This year’s bitcoin rally is one sign that “there is still a lot of risk in the market and that” investors continue to act less conservatively than they say.
