Why a sudden surge in cryptocurrency prices added $200 billion to Bitcoin, Ethereum, BNB, XRP, Cardano, Dogecoin, Polygon and Solana in 2023

bitcoins
bitcoins
ethereum and other major cryptocurrencies have suddenly jumped higher after trading sideways last week (and some think the rally may have just begun).

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The price of bitcoin has rocketed to nearly $23,000 per bitcoin, from lows of less than $20,000 this week, adding 7% in the past 24 hours. The price of ethereum has increased by a similar amount, reflecting ten other coins in the BNB top ten
BNB
XRP
XRP
, cardano, dogecoin and polygon. FTX-linked solana, an Ethereum challenger, added nearly 20%.

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The sudden $200 billion rally in Bitcoin and cryptocurrencies in 2023, which saw some smaller coins leave bitcoin in the dust, has been attributed to growing hopes that the Federal Reserve and other central banks will move to slow rate hikes. interest rates, although some have warned traders could get ahead of themselves.

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“The last couple of months have undoubtedly brought indicators of a more positive environment regarding inflation, as well as the push to reopen the Chinese economy,” said Max Coupland, editor of CoinJournal, in comments via email.

Last week, data showed that the pace of US inflation fell to its lowest level in more than a year in December, a sign that price pressures may have peaked. Last year, the Fed implemented four consecutive three-quarter point rate hikes, followed by a half-point hike in December.

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“I worry if investors are jumping the gun assuming this means the Fed will now roll ahead of schedule,” Coupland added. “Fed Chair Jerome Powell has been adamant that rates will not cut until inflation is firmly under control, and we are still a long way from the 2% target, while uncertainties like Russia’s war in Ukraine still loom highly unpredictable.”

In recent days, Federal Reserve officials have warned that interest rates must rise to completely eliminate the surge in inflation that hit a 40-year high in 2022. Rate hike by 25 basis points.

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Meanwhile, bitcoin, ethereum and other major cryptocurrencies appear to have broken their ties with the US stock market.

“While US stock indexes clearly rallied into the new year on Wednesday, bitcoin still maintains its position above $20,000,” Yuya Hasegawa, cryptocurrency market analyst at Bitbank, said in an email.

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“Indices may still drop further to find a local bottom in the coming days, bitcoin will likely be supported at the psychological $20,000 level. In other words, bitcoin’s decline will likely be shallow.”