Several recent indicators point to a potential warming of the cryptocurrency winter that has been underway since last year, with the US Federal Reserve gradually easing inflation.
The first sign of cryptographic spring is found Increase in the price of bitcoin, which is the general barometer of the digital asset market. Indeed, since the beginning of the year, the value of the cryptocurrency no. 1 in the industry is up 30% against the US dollar. BTC then dropped from $17,000, where it had been stuck since the FTX crash in November, to $21,000.
The rebound of the cryptocurrency and NFT market
Like Bitcoin, the broader cryptocurrency market has also shown signs of a resurgence lately. Ethereum, the second largest crypto in the industry, has also gained about 31% since the beginning of the month. So, after similarly stagnating around $1,200, ETH is now at around $1,600.
While still down from its peak of $3.2 trillion in November 2021, the total cryptocurrency market cap has also recovered. From about 830 billion dollars at the end of last year, this last one is so gone over a trillion dollarsor $1 trillion.
While down from its peak, non-fungible token (NFT) sales have as well suffered a rebound in the last weeks. Thus, after several months of declining NFT sales, volumes finally picked up on a month-on-month basis in December.
This volume deviation can be explained by the launch of the NFT Blur market. In December, this “NFT market for professional traders” had transaction volumes of $484 million. This is nearly double the volume of OpenSea, the traditional market leader, over the same period.
The impact of US inflation is inseparable from the market
Similar to traditional financial markets, cryptocurrencies have started to rise due to increased investor confidence in the policies of the United States Federal Reserve (Powered). In fact, the latter has systematically raised interest rates in an aggressive manner over the last year, in order to combat galloping inflation.
However, the Fed trimmed the amount of its rate hikes at its latest meeting amid plausible indicators that its policies were working. The predictions turned out to be correct, since according to the latest data, the consumer price index fell by 0.1% in December. Thus, although year-on-year inflation remained at 6.5%, it still represents the sixth consecutive month of decline.
Markets thus raised hopes of a “soft landing” in the face of a possible recession, which an overly aggressive Fed could trigger. One expert pointed out that this overall market rally also included riskier assets, such as cryptocurrencies.
Moral of the story: the US inflation barometer, the new cryptocurrency thermostat.
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