Bitcoin Barrel Towards Historic January As Crypto Market Jumps $280 Billion

The top token is up 39% year-to-date, a first-month gain bettered only twice before when the crypto was in its infancy. Smaller pieces like Solana, Axie Infinity and Decentraland doubled in value, part of an overall January $280 billion increase in digital assets, according to figures from CoinGecko. Bitcoin fell 2.9% to $23,111 as of 10:44 a.m. in New York Monday amid broad declines in risk assets.

The rebound from last year’s deep rout is part of a broader revival in risk appetite on expectations that central banks will slow interest rate hikes and perhaps even cut costs borrowing later this year as high inflation moderates.

The rally in virtual coins weathered the continued fallout from the collapse of Sam Bankman-Fried’s FTX exchange – such as the bankruptcy of crypto lender Genesis Global Holdco LLC and a series of industry layoffs.

January “looks like a month of new beginnings, with clarity emerging on bankruptcy proceedings, corporate restructurings and market fundamentals indicating that the bottom is behind we“, wrote Noelle Acheson, author of the newsletter “Crypto Is Macro Now”.

Still, many skeptics doubt the rally in crypto and tech stocks will last. One risk is that the economic soft landing markets are hoping for is whimsical because rates need to stay higher for longer.

The return of speculation assets like Bitcoin and the Ark Innovation ETF will “likely reverse” if oil, wages and consumer price increases temporarily turn the “soft landing” narrative in the coming weeks into a “no landing,” strategists at Bank of America Corp. led by Michael Hartnett said last week.

Federal Reserve Chairman Jerome Powell could also remind investors that officials plan to keep rates high for some time. He is due to speak after an expected Fed cut to a quarter-percentage-point hike this week.

Some corners of the world markets also issue flashing warnings. For example, hedge funds have constructed the biggest ever bearish bet on bond futures, clashing with the narrative that a peak in rising rates is near.

For now, momentum is king. Rick Bensignor of Bensignor Investment Strategies targeted $25,000 for Bitcoin in a note on Monday, a level last seen in August.

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