Expectations are rising that spring is coming to the crypto market, which had a severe winter last year due to the bankruptcy of the crypto exchange FTX. Some call this year the year of Bitcoin recovery. However, some point out that the dark ages of cryptocurrency will continue as the problem of FTX bankruptcy has not yet been resolved.
According to Investing Dotcom and CNBC on the 16th (local time), Bitcoin, the No. 1 market capitalization in the crypto market, seeing spring by rising 28% this year as of this day. The price of Bitcoin, which stayed at $16,000 until the 1st, is currently above $21,000 now. This is still far below the all-time high of $68,990 in November 2021.
However, major foreign media and market experts noted that Bitcoin surpassed $21,000 for the first time since November 7 last year, and the upward rally continues unlike last year, when it fell more than 60% due to global interest rate hikes and FTX bankruptcy.
Citing expert analysis, CNBC reported that the emergence of “whale” investors who enjoy large-scale investments and expectations of a rate cut by the U.S. Federal Reserve (Fed) due to signs of slowing inflation have boosted cryptocurrency prices. The Fed raised its key interest rate seven times last year for price stabilization purposes. The U.S. benchmark interest rate, which was “zero” early last year, has now risen to 4.25-4.5% and reached its highest level since 2007.
However, market participants expect the Fed’s monetary policy to shift from tightening to easing as the recently announced U.S. Consumer Price Index (CPI) growth slows significantly and economists raise concerns over an economic recession. In a recent survey of economists conducted by the Wall Street Journal (WSJ), 51% of respondents predicted a rate cut within the year.
The weak dollar, which is mainly used in cryptocurrency transactions, and the increased difficulty of mining Bitcoin are also cited as factors for the rise. According to BTC, a cryptocurrency mining company, the difficulty of mining Bitcoin reached 37.6 trillion won as of the 15th. This is the aftermath of a decrease in the number of miners due to falling bitcoin prices and rising energy costs. Hashrite, which means mining difficulty, falls as the number of working miners increases, which the industry believes leads to a drop in cryptocurrency prices.