Cryptocurrencies continue to rise; Bitcoin consolidates at the $17,000 level
The cryptocurrency market is not slowing down. Bitcoin (BTC) continues its rebound from the beginning of the year and gains 1.4% in the last 24 hours, which allows it to stand at $17,400. Ethereum (ETH), meanwhile, rises more than 0.8% and consolidates at $1,300.
The reigning cryptocurrency has appreciated by more than 5% so far this year and has returned to levels not seen in almost a month after a very negative close to 2022. For Craig Erlam, senior analyst at Oanda, this is due to an improvement in risk appetite, although the situation remains "fragile." "An unpleasant surprise tomorrow, on Thursday, in the US inflation report could send risk assets backwards. However, the cryptocurrency environment remains the main driver and has calmed down a bit in recent weeks, which will be welcomed by investors," he explained.
There are no interest references on Wednesday's agenda, with investors awaiting the US December CPI due on Thursday, for which both the headline and core rates are expected to decline.
"This week's US CPI report is now the next focus of attention as part of the ongoing tug-of-war, with the market believing the Fed will have to cut rates this year, while Fed officials insist nothing of the sort will happen," noted Michael Hewson, head of analytics at CMC Markets in London.
On this front, cryptocurrencies welcomed Powell's remarks, which, according to Hewson, offered no clues as to what the Fed intends to do in the future, although he stressed the need to continue implementing "unpopular" measures to tame inflation. Other central bankers, such as Mary Daly and Raphael Bostic, were more specific and hawkish than their chairman.
On the other hand, Glassnode stressed that the Christmas period has been "historically quiet" and emphasized that it is rare for such conditions to stick around for long. "Past occasions where BTC and ETH volatility was this low have preceded extremely volatile market environments, with past examples trading both higher and lower," they noted in their weekly analysis.
"On-chain activity for the two majors remains extremely weak, despite a short-term bump following FTX. Using both on-chain activity, and realized cap drawdowns, it is safe to say that the excesses of H2-2021 has been largely expelled from the system. This process has been painful for investors, however has brought market valuations closer to their underlying fundamentals," they added.
In other market news, Ripple (XRP) has rallied more than 4%. Cardano (ADA) trades almost flat after outperforming Dogecoin (DOGE) in market capitalization, which gains more than 1% in the last 24 hours, as well as Polygon (MATIC). Litecoin (LTC), Tron (TRX) and Shiba Inu (SHIB) have risen more than 2%, while Solana (SOL) has increased 0.7% and is approaching LTC's market cap.