The largest cryptocurrency by market cap, Bitcoin BTC/USD surpassed the psychologically important $21,000 mark. Saturday’s move brought joy to subdued markets, which were rocked by the collapse of several high-profile companies, including the cryptocurrency exchange FTX FTT/USD.
The price rally of the most important cryptocurrencies such as e.g polygon MATIC/USD and Solana SOL/USD and memecoins like Dogecoins DOGE/USD and Shiba Inu SHIB/USD is fueled by optimism that digital currencies may have bottomed.
This marks the first time since November 8, 2022 that Bitcoin has surpassed $20,000 after experiencing 11 straight days of bullish movement.
Other notable cryptocurrencies such as ether ETH/USD and Cardano ADA/USD also posted significant gains, taking the total cryptocurrency market cap above $1 trillion for the first time since November.
Bitcoin’s current surge in value comes after the Department of Labor released data showing that top-line inflation rose 6.5% in December, compared to 7.1% in November.
On Thursday, Federal Reserve policymakers expressed relief that inflation continued to fall in December.
Bear market not over
Andy LianChief Digital Advisor, the Mongolian Productivity Organization, tells Benzinga that investors should take a cautious stance and not get too optimistic about the digital currency.
“That doesn’t mean the bear market is over. First, the lack of bitcoin trading volume in the $18,000 area and RSI shows that bitcoin is overbought, showing that the rally may be short-lived. Second, the massive firings of crypto companies and the new SEC indictments genesis and Twins for the unregistered offering and sale of crypto-asset securities looks like it may be taking longer to see a true sustained bull run,” he says.
He added that bitcoin and other cryptocurrencies tend to react more quickly to macroeconomic changes and shifts than stocks, and that we may be witnessing such a shift right now.
“I’m seeing more investors investing more capital throughout the week. Overall, this is still a positive sign for the market,” he adds.
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Mainstream adoption will bring more stability
After Scott Trippa member of redecentralise.com, a non-profit organization, Bitcoin’s increasing mainstream adoption and institutional acceptance will lead to greater price stability over time, the current rally is fueled by speculation frenzy and may not be sustainable in the long term.
Bitcoin could continue to shoot higher throughout 2024
Raj A Kapoorthe founder of the India Blockchain Alliance, predicts that 2024 could be the year that Bitcoin sees a significant price increase due to the halving event.
According to Kapoor, this event could be responsible for the current positive sentiment and bullish trend in Bitcoin value.
“I also have a feeling that major investors or bitcoin whales have restarted their bitcoin holdings. The big bitcoin whales are holding between 1,000 and 10,000 BTC in their wallets, which according to data from Santimen clearly indicates that investors have stocked up on bitcoin, which could be indicative of a bitcoin price rally,” adds Kapoor .
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