Market update
Back in early 2018 all of crypto was pinning its hopes on a post Lunar New Year recovery that never came. Well, in 2023 the markets keep going up and much of Crypto Twitter seems united in disbelief. Is this just a bull trap? Bitcoin is now up 38% in the year to date and hit US$23,230/A$33K on the weekend for the first time since August 2020. The total crypto market cap is once again above US$1 trillion – it’s currently A$1.5T – and Gold and the S&P 500 are also recovering, up 19% and 13% respectively. Bitcoin finished the week up 6% to trade around A$32,700 (US$22,980) while Ethereum gained 1% to trade at A$2,320 (US$1,630). Almost everything else was up including XRP (8%), ADA (5%), DOGE (4%), SOL (4%), but MATIC lost 4%. The Crypto Fear and Greed Index remains at 52 or ‘neutral’.
Is Crypto Winter over? Bitcoin suddenly broke through US$20K (A$28.7K) on Saturday and then US$21K (A$30.2K) on Sunday. Bears were rekt with US$500 million (A$718M) in liquidations. Bitcoin is again trading above the 2017 top and has recovered its losses from the FTX collapse. Pundits point to inflation moderating by 0.1% in December, FTX finding US$5B (A$7.18B) in assets, whales growing more confident and the Bitcoin halving in May 2024 as possible reasons for the rally. Bitcoin is currently trading at A$30,430 (US$21.2K), up 19% for the week, while Ethereum is at A$2,265 (US$1,577), up 15% on seven days ago. Everything else increased: XRP (7%), MATIC (17%) and SOL (39%). The overall crypto market cap is at $1.425 trillion (US$992B). After 10 months the Crypto Fear and Greed Index hit 52 or ‘neutral’ two days ago; it currently sits around the same at 51 at the time of writing.
Crypto markets appeared to have finally turned a corner this week after grinding along with low volatility since the collapse of FTX in November. It’s too early however to call the bottom or work out if this is just a bull trap. Pundits linked the rise to markets expecting a lower US inflation figure this week and for interest rates to peak around 5%, but in truth it’s just as likely to be the fact that no major exchange or crypto firm has collapsed in the past couple of weeks. Bitcoin has broken through the US$17K (A$24.6K) mark and is up 3% from a week ago to trade at A$17,220 (US$24,885). Ethereum gained 8.6% to trade at A$1,910 (US$1,322). Everything else was up, including Cardano (24%), Dogecoin (6%) and Polygon (7.8%). Solana gained 46% and has more than doubled in price since its lows two weeks ago. Crypto mining companies and other blockchain-linked stocks, including Riot Blockchain, Marathon Digital, Coinbase and Silvergate have all rallied by double-digit percentages on share markets.
Crypto markets rose mid-week in expectation of a more positive outlook from the Federal Reserve, and Bitcoin peaked above US$18,000 (A$26.4K) for the first time since FTX collapsed. Then everything crashed after the Fed hiked rates by 50 basis points and said it will continue to raise rates into 2023. The good news is that US inflation came in at 7.1%, better than expected, and the slowest pace in nearly a year. Bitcoin finishes the week 5.5% down at A$25,045 (US$16,750) while Ethereum lost 6% to trade around A$1,780 (US$1,160). Everything else was down including XRP (-14%), Cardano (-19%) and Dogecoin (-20%). The Crypto Fear and Greed Index is at 29 or Fear.
With all the paper hands and retail tourists gone long ago, crypto markets aren’t making any dramatic moves despite fresh bad news coming out daily. Bitcoin was down 2% on seven days ago to trade at A$25,485 (US$17,190) and Ethereum also lost 2% to trade at A$1,888 (US$1,273). XRP lost 4% (there are unconfirmed rumours of a settlement in the SEC case), Dogecoin fell 13% while Cardano lost 7%. November’s US inflation data comes out in the next 24 hours and markets expect the next rate rise will be 50 basis points.