Bitcoin prices on Monday climbed past $17,000 for the first time since mid-December, leading gains across broader cryptocurrency markets as traders bought into the space on growing expectations that the United States Federal Reserve will soften its hawkish stance this year.
"Bitcoin crossed the $17,000 mark for the first time in 2023 owing to the positive outcome of the U.S. jobs report which reported the lowest unemployment rate, back to pre-pandemic levels. The traditional financial markets reacted sharply to the development as the stocks rallied owing to the signs of easing inflation," Shivam Thakral, CEO of BuyUCoin, told ABP Live.
"The positive jobs data suggests that Fed may not go for an aggressive rate hike in its next meeting in February which may prove beneficial for the global crypto market," the CEO added.
The world’s largest cryptocurrency rose 1.7 percent to $17,235.3 by 00:26 ET (05:26 GMT), helped by weakness in the dollar after nonfarm payrolls data released on Friday showed that the United States jobs market was cooling, giving the Federal Reserve less economic headroom to hike interest rates.
The speculation on Fed policy gave the Ziliqa token a 24-hour jump of over 30 percent, while Ethereum, Dogecoin, Litecoin, and Ripple all landed in the green, and the Solana coin continued to enjoy its bullish streak, seeing a 24-hour jump of over 20 percent.
Ethereum the World No. 2 cryptocurrency rose 4 percent and broke above the $1,300 level for the first time since mid-December, a key level that could pave the token's path toward $1,350 next if its previous price performance is any indication. Most options traders anticipate a run toward $3,500-$4,000 before April 2023.
The prospect of slower interest rate hikes by the Fed comes as a great relief to the cryptocurrency market, which plummeted in value through 2022 as the Fed’s monetary tightening unwound two years of ultra-accommodative policy enjoyed by the space. This sharp drop in value also triggered a string of high-profile bankruptcies, which the crypto market is still reeling from.
Focus this week is also on U.S. inflation data due on Thursday. Signs of easing price pressures could give the Fed more impetus to curb its hawkish rhetoric.
But even though Bitcoin stands to benefit from a less hawkish Fed, the cryptocurrency is trading at a fraction of highs hit during 2021. The cryptocurrency plummeted 65 percent in 2022, a drop that challenged its proposed status as a store of value, a currency, or even an inflation hedge.
This steep drop in value, coupled with a string of high-profile crypto bankruptcies in 2022, has also soured sentiment among retail investors towards cryptocurrencies at large.
The space lost over two-thirds of its value in 2022 and has so far struggled to make a comeback in the first trading week of the year.
Still, past cycles have shown that cryptocurrency bull runs occur only during periods of easy monetary policy. With the Fed now set to soften its hawkish stance this year and potentially pause its rate hike cycle later this year, crypto's outlook could see some solidification into 2024.
Gaurav Dahake, CEO of Bitbns, told financialexpress.com: “The industry is also batting for increased innovation and adoption of decentralized infrastructure, to offer more transparent and secure trading methods and management of digital assets. With all this and more in the making, the coming year definitely looks promising for crypto enthusiasts who have continued to show faith as well as cynics who still question their viability.”
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