Capitalizing on the recent economic progress and declining inflation rates, bitcoin skyrocketed to a record high of $21,000 in early weekend trading before dipping slightly. This is the highest level bitcoin has seen since November.
Recently, the leading cryptocurrency by market capitalization was trading at around $20,830 – a negligible change compared to its activity over the past day. Nevertheless, BTC has experienced an impressive 25% jump in 2021 and this surge is mainly due to investor confidence that U.S monetary policy is successfully controlling inflation without throwing us into recession. Since Tuesday last week when Bitcoin was valued at roughly $17,400 it’s been an upward trajectory for most risky assets as we enter a new year of growth potential.
Examining the market on Friday, Connors revealed that starting from January, altcoins had been able to surge up to 80%, such as SOL. He also mentioned that recent remarks by Fed governors were less hawkish a sign indicating an end in sharp money supply reduction and potential decreases of hikes and balance sheet reductions.
“We see the current rally in digital assets as a market reversal and NOT a bear market rally,” Mark Connors, the Head of Research at 3iQ, a Canadian digital asset manager, commented in an email.
“Significant, as the reduction over the past 12 months was the largest since 1959,” His words conveyed a powerful message.
“This is relevant to digital assets as BTC is deemed to be a hedge against debasement, NOT inflation.”
While some major cryptos climbed several percentage points and others plunged, FTT is making headlines after it soared 35% to trade above the $2 mark. Notably, only seven months ago, the token associated with embattled crypto exchange FTX was trading over $35.On the other hand, SOL -the Solana blockchain’s native token- declined about 5%, despite its connection to FTX’s recent turmoil. The currency has been gaining traction for weeks prior this dip.
Cryptocurrency as a whole appears to be gaining more acceptance, not only from major investors but also from governments. To that end, BTC’s current sustained rally could mark the beginning of digital currencies becoming an integral part of financial infrastructure around the world.
Conclusion
The tailwinds of inflation are here and investors are taking their chances with Bitcoin. With the current activity, it appears that we could see a sustained rally in the cryptocurrency market for the foreseeable future. The coming weeks will show if digital assets maintain this trend and become part of our daily lives as a means to store value or just another form of speculation.
