Bitcoin briefly surpassed $24,000 on Friday, recording its highest monthly performance in nine months as risk assets continued to rise. According to CoinDesk data, the world’s largest digital currency touched a six-week high of $24,412 early Friday, its highest level in more than six weeks. Bitcoin has subsequently given back some of its gains, closing the session close below $24,000.
This week, the cryptocurrency gained 4.8 per cent, and it finished July up 26.8 per cent, its biggest month since October and the first positive month in four.
Bitcoin’s gain began after the Federal Reserve raised interest rates on Wednesday, but indicated that the rate of such increases may moderate. This triggered a rise in US equities.
Cryptocurrency movements have recently tracked those of US stocks, particularly the tech-heavy Nasdaq, which has risen strongly in the last two days.
Other cryptocurrencies, including as ether, rose dramatically on Friday.
“Overall, I think markets have reacted positively to the Fed’s comments and arguably have priced in most of the rate hikes,” Vijay Ayyar, vice president of corporate development and international at crypto exchange Luno, told CNBC via text message.
“There seems to be a lot of liquidity sitting on the sidelines, which is now coming in based on the last few months of consolidation/downward pressure, that is now easing up,” he added.
Nonetheless, bitcoin is down roughly 48% this year and is still more than 60% off its all-time high price of $68,990.90, set in November.
The crypto market has been beset by a number of crises, including the demise of algorithmic stablecoin terraUSD, which triggered a series of events that resulted in the bankruptcies of lending platform Celsius and hedge firm Three Arrows Capital.
Market participants are attempting to figure out where the bottom is for bitcoin and whether the industry’s deleveraging and shakeout is complete. Market participants told CNBC that they want to see a stronger macroeconomic picture and the completion of deleveraging before they believe bitcoin has reached its bottom.
Since mid-June, bitcoin has traded in a range of roughly $18,000 to slightly over $24,000, and Luno’s Ayyar stated that investors have been accumulating bitcoin at those rates.
(Adapted from Business-standard.com)