In the first week of 2023, the cryptocurrency market showed a slight recovery. From $790 billion on December 31, the market cap of the crypto market rose to $814 billion, according to data from CoinMarketCap. Bitcoin was up a marginal 1.82 per cent to $16,801 and Ethereum was up nearly 5 per cent to $1,250.
“The broader crypto market picked up momentum mid-week due to the holiday season. Bitcoin traded at the $16,584 level in the earlier days, and now it trades above the $16,800 level. Bitcoin had been trading within a narrow range between $16,256 and $17,061 over the past few days,” said Alankar Saxena, CTO and co-founder at crypto investment platform Mudrex.
“Bitcoin started consolidating above the $16,800 level on Thursday as market volatility remained high following the recent FOMC’s minutes,” he added.
The recently released minutes of the Federal Open Market Committee’s (FOMC) December 13 and 14 meetings signalled that the rates may continue to remain high as “unwarranted easing in financial conditions, especially if driven by a misperception by the public of the committee’s reaction function, would complicate the committee’s effort to restore price stability”.
The crypto industry is expecting a pivot in 2023 but it might continue to be under the pressure of inflation and unemployment data.
“While the market for this year expects a pivot, multiple data streams such as wage inflation, unemployment data, and consumer inflation numbers will continue to dominate Fed’s movement this year,” said Anurag Dixit, founder of crypto asset management platform Kunji.
Another major event in the crypto world was when the Co-Founder of crypto exchange Gemini Cameron Winkelvoss gave a soft ultimatum to Digital Currency Group (DCG) CEO Barry Silbert to collaborate in “good faith”.
Gemini used to offer 8 per cent interest to investors on certain digital assets under its Earn programme. The trading platform Genesis was a contributor to the programme. However, Genesis was also an investor in FTX. When FTX collapsed, Genesis came under severe financial stress. According to a report by The Wall Street Journal, it will lay off 30 per cent of its workforce and might consider bankruptcy.
Now, due to a cash crunch, the withdrawals from Gemini have been halted for over 50 days. DCG owes $1.675 billion to Genesis and now Cameron has asked Silbert to repay it by January 8.
“With varied allegations and statements coming out for Genesis and DCG’s previous shady moves, it’s becoming very evident that huge liquidation…is highly probable,” Dixit said.
What to expect next week?
According to Saxena, Bitcoin’s support lies at $16,800. Its resistance lies at $16,900 and then $17,000.
For Ethereum, “sentiment remains somewhat bullish” as it “continues to trade above the $1,250 level”.