The cryptocurrency market has recovered in the last one week on the back of cooling inflation. The market cap has jumped almost $100 billion from $812 billion on January 6 to $910 billion on Friday, according to CoinMarketCap. Bitcoin was up 13 per cent during the period and was trading at $18,960. Ethereum was up 13.5 per cent and was trading at $1,411.
The US inflation cooled down to 6.5 per cent in December as compared to a year ago.
“The market’s past week witnessed a significant boost, as the rally from the first week of 2023 continued. CPI marked 6.5 creating an environment of relief. Bitcoin and alternative cryptocurrencies continued to rise above the Nasdaq and S&P 500 indexes,” said Anurag Dixit, founder of the crypto asset management platform Kunji.
“In what can be touted as a complete U-turn from 2022 end, crypto markets have been rising steadily over the last week. The most recent surge in prices is on the back of upcoming monthly inflation data in the US, where economists are predicting negative month-on-month growth or deflation, as the unprecedented increase in Fed rates has finally started resulting in a cool-off in prices. This has resulted in increased buoyancy across “risk-on” asset classes, with equities rising sharply as well,” said Parth Chaturvedi, crypto ecosystem lead at crypto exchange CoinSwitch.
“Crucially, Bitcoin and Ethereum are trading above the important levels of $18,000 and $1,400, respectively,” he added.
The situational heat regarding the Genesis and Gemini issue has, however, increased. The US Securities and Exchange Commission (SEC) on Thursday filed a lawsuit against both of these crypto companies alleging that they sold unregistered securities.
According to Chaturvedi, it poses a threat to the financial health of the industry.
Another major development of the sector was the registration of crypto exchange Binance as the financial institution in Sweden
“Sweden’s financial regulatory agency announced that it had registered Binance, a major global cryptocurrency exchange, as a financial institution in the country. This registration enables Binance to operate a website in Swedish and directly market its services to consumers in Sweden. Binance accounts for a majority of global cryptocurrency trading and, with this registration, has now obtained regulatory approvals or permissions in 15 different jurisdictions, including several EU countries, Australia and New Zealand,” said Alankar Saxena CTO and co-founder of crypto platform Mudrex.
Moreover, broadly in line with the tech sector, crypto exchange Crypto.com announced that it would lay off 20 per cent of its workforce to focus on “prudent financial management” and “to position the company for long-term success”.
But the outlook for the sector, according to experts, remains positive in the short-term.