Bitcoin hits two-month high, trades above $19,000 following December inflation data
Bitcoin (BTC-USD) rose nearly 8% on Thursday to near a two-month high following December inflation data as sentiment continues to improve in the cryptocurrency market.
At its highs on Thursday, bitcoin traded hands as high as $19,091, the highest level since the collapse of FTX in early November.
This jump followed inflation data out earlier in the day which showed a continued slowdown in price increases to end 2022.
Between Nov. 8 and Jan. 8, bitcoin — which has accounted for 38% to 40% of the crypto market’s total value — had traded in a range of $15,599 to $17,000 per coin.
Over the past several days, however, bitcoin has rallied as risky assets — including cryptocurrencies and some meme stocks — have found a bid in markets.
After announcing layoffs of 950 workers Tuesday, shares of Coinbase Global (COIN), the largest U.S. based crypto exchange, rose more than 8% on Thursday.
The total market capitalization for crypto assets has risen by more than $40 billion in recent days to climb back above $900 billion. At the start of 2022, the total market capitalization for crypto assets stood at more than $2 trillion.
John Haar, managing director for private client services with bitcoin exchange Swan, said even with Thursday's rally on hopes that the Federal Reserve has ended its "most hawkish" monetary tightening, the next big indicator will come at the conclusion of the Fed's next policy meeting on Feb. 1.
Haar pointed to the knock-on effects from the exchanges or asset managers potentially running into more financial trouble as an overhang for bitcoin and the crypto market. Moreover, investors may still be grappling with fears of another major firm filing chapter 11, which could trigger another selling event or at least hurt sentiment in the space.
Haar also warned of the impact from troubled bitcoin mining firms on the market, noting these companies are being hit by rising electricity prices which are squeezing already-thin margins.
“When the price stays down for longer, more and more miners become stressed,” Haar explained.
“They have models for market downturns. For instance, if bitcoin's price stays around $18,000 for a month they are fine. Well, what if that is extended for three months or how about after six months? These business models might break," he added.
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