The cryptocurrency market saw an unexpected rally on Wednesday and Thursday after the release of the US inflation data showing prices cooling down for the seventh straight month. On Thursday, Bitcoin touched a six-month high of $25,122, data from coinmarketcap showed. Ethereum too was at a several-month high of over $1,700.
The US inflation, according to data released on Wednesday, continued to fall for the seventh straight month in January to 6.4 per cent. It has fallen significantly from the 9.1 per cent recorded in June 2022.
“In what can be described as a ‘surprise rally’ even amidst increasing regulatory gloom in the US, crypto markets witnessed a sharp surge in prices in the last two days. The sudden up move was triggered after US consumer data suggested that sentiment remained strong and there is an increased probability of a soft landing; which resulted in a rally across ‘risk-on’ assets,” said Parth Chaturvedi, crypto ecosystem lead at crypto exchange CoinSwitch.
The regulatory stance in the US crypto market has been tight after the Securities and Exchange Commission’s (SEC) $30 million fine on the exchange Kraken last week.
“Further, the SEC Chair announced new custodial rules and directions for crypto assets, which would add further regulatory hurdles for crypto companies operating in the US,” Chaturvedi added.
But the market seems to be resilient. Bitcoin is up 8.7 per cent in the last seven days. Ethereum is up 7.5 per cent. Several other crypto tokens like Cardano, Polygon, Dogecoin and Solana too were up over 5 per cent.
“Despite the dip, Bitcoin has managed to gain a staggering 73 per cent from its lowest point just a month ago… Ethereum is up by 85 per cent since its lowest point, 8 months ago,” said Alankar Saxena, CTO and co-founder of crypto asset management platform Mudrex.
In the rally, however, Bitcoin has gained more than other currencies. Its market cap dominance has jumped and now accounts for over 42.2 per cent. Bitcoin enjoyed such dominance in the market previously in September 2022.
“While the move has taken BTC to $24,700 mark, more sustained movements will help to make the market constitution healthier,” said Anurag Dixit, founder of crypto platform Kunji.
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