Market News

Bitcoin Weathers Global Market Slump Sparked by Inflation Jump - BLOOMBERG

FEBRUARY 14, 2024

BY  Suvashree Ghosh and Sidhartha ShuklaBloomberg News

, Bloomberg

(Bloomberg) -- Bitcoin climbed past $52,000 in a broad cryptocurrency rally that saw Ether, the second-biggest token, advance back to where it was before the TerraUSD stablecoin collapsed almost two years ago. 

Bitcoin’s 22% year-to-date gain pushed its market capitalization above $1 trillion for the first time since December 2021, data from CoinGecko show. Ether rose 5% as of 9:39 a.m. in New York on Wednesday, and altcoins like Avalanche, Polkadot and Polygon also climbed. 

A higher-than-expected US inflation print on Tuesday wasn’t enough to derail the digital-asset recovery that began a little over a year ago and gained momentum in past months with the Securities and Exchange Commission’s approval of Bitcoin ETFs. Even so, some analysts are cautioning that technical signals suggest the rally risks at least temporarily running out of steam.  

Read more: Momentum Slams Into a Wall in S&P 500’s Worst CPI Day In Years

Bitcoin showed “impressive resilience despite the overnight deterioration in risk sentiment,” Tony Sycamore, a market analyst at IG Australia Pty, wrote in a note. At the same time, separate technical analysis based on chart patterns signals the possibility of a temporary dip to the high $30,000s, he said.

The biggest token rose as high as $52,054 and traded at around $51,800 at 9:44 a.m. in New York. Ether was at around $2,760. 

Ether has been slower than Bitcoin in climbing back to levels preceding the TerraUSD implosion in early May 2022, a psychologically important threshold given the devastation that event wrought. TerraUSD’s creator, Do Kwon, is in custody in Montenegro and awaiting extradition to either his native South Korea or the US, where he’s wanted on fraud charges. 

Sector-specific factors have been supporting Bitcoin, including the debut of US exchange-traded funds dedicated to the token. The batch of products from the likes of BlackRock Inc. and Fidelity Investments have attracted a net $3.3 billion since they began trading on Jan. 11.  

Meanwhile, the so-called Bitcoin halving due in April will curb supply of the largest digital asset, a development viewed by many as a prop for prices based on historical precedent.

“We expect the market to take a short pause here after a spectacular four-month-long rally, before the upcoming Bitcoin halving takes over the narrative,” said Caroline Mauron, co-founder of digital-asset derivatives liquidity provider Orbit Markets. 

Bitcoin has tripled since the start of last year in a comeback from the 2022 digital-asset rout. Wagers in the options market indicate traders are targeting prices beyond the record of almost $69,000 achieved in November 2021.

(Updates prices from first paragraph.)


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