The largest cryptocurrency by market capitalization, Bitcoin BTC/USD has spiked above the psychologically important barrier of the $21,000 mark. Saturday's move brought cheer to the subdued markets, which have been rattled by the collapse of several high-profile companies, including cryptocurrency exchange FTX FTT/USD.
The rally in prices of major cryptocurrencies like Polygon MATIC/USD and Solana SOL/USD and memecoins like Dogecoin DOGE/USD and Shiba Inu SHIB/USD, is fuelled by optimism that digital currencies may have bottomed.
This is the first time since Nov. 8, 2022, that Bitcoin has crossed $20,000, having experienced 11 consecutive days of upward movement.
Other notable cryptocurrencies such as Ethereum ETH/USD and Cardano ADA/USD also saw substantial gains, pushing the total market capitalization of the cryptocurrency market over the $1 trillion mark for the first time since November.
The current spike in Bitcoin's value comes after the Labor Department issued data showing that top-line inflation rose by 6.5% in December, down from 7.1% in November.
On Thursday, Federal Reserve policymakers expressed relief that the inflation rate continued to decrease in December.
Bear Market Not Over
Anndy Lian, Chief Digital Advisor, of Mongolian Productivity Organization tells Benzinga says investors should take a cautionary stance and not become too bullish on the digital currency.
“This does not mean that the bear market is over. Firstly, the lack of Bitcoin trading volume around the region of $18,000 and RSI shows that bitcoin is over-bought, showing that the rally could be short-lived. Secondly, the massive layoffs by the crypto companies and the SEC's new charges on Genesis and Gemini for the Unregistered Offer and Sale of Crypto Asset Securities looks like it would take a longer time to see a real sustainable bull run,” he says.
He added that Bitcoin and other cryptocurrencies tend to respond more quickly to macroeconomic changes and shifts than stocks do and that we may be currently witnessing such a shift.
"I do see more investors putting more capital over the week. Overall, this is still a positive sign for the market," he adds.
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Mainstream Adoption Will Lead To More Stability
According to Scott Tripp, a member of redecentralise.com, a not-for-profit organization, the increasing mainstream acceptance and institutional adoption of Bitcoin will lead to more stability in its price over time, the current rally is driven by speculative mania and may not be sustainable in the long run.
Bitcoin May Shoot Up Further Over 2024
Raj A Kapoor, the founder of India Blockchain Alliance, predicts that 2024 could be the year when Bitcoin experiences a significant price increase due to the halving event.
According to Kapoor, this event could be responsible for the current positive sentiment and upward trend in Bitcoin's value.
“I also feel that large investors or Bitcoin Whales have resumed their Bitcoin holdings. The large Bitcoin whales are keeping between 1,000 and 10,000 BTC in their wallets, according to data from Santimen clearly indicating that investors have been stocking up on Bitcoin, which may be a hint of a recovery in the price of Bitcoin,” Kapoor adds.
Photo: courtesy of Shutterstock.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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