Cryptocurrencies experience a notable and surprising rebound
The cryptocurrency market has been surprised by a sudden change in the direction of digital assets, after suffering a drop in the past sessions and facing growing regulatory pressure in the United States. In particular, Bitcoin has experienced an 11% increase and has surpassed $24,500, reaching highs not seen in the last six months. Meanwhile, Ethereum has risen more than 8% and is close to recovering $1,700.
According to Oanda's senior market analyst, Craig Erlam, these last 24 hours have been excellent for Bitcoin and could generate greater interest in cryptocurrencies. Although regulation remains a concern for some investors, there is a growing sense of relief in the sector, as it is believed that the worst is already behind and 2023 could be a much better year. The next big test for digital assets will be to surpass the $24,500 to $25,500 barrier, as this could convince skeptics that the future of cryptocurrencies is bright.
Following the lukewarm US January inflation data, which moderately eased the markets regarding the Federal Reserve's future plans, cryptocurrencies have experienced a notable surprise rebound. With this latest move, the bullish traders seem to have the upper hand. According to Coinglass data, the total short liquidations of Bitcoin in the last 24 hours have reached $85 million.
Furthermore, there is an increasing sense of optimism among investors in the Bitcoin derivatives market. According to the data provided, the open interest (OI) in the perpetual futures market indicates that traders are establishing long positions. Also, funding rates have mostly been positive, showing a willingness to go long. Conversely, the reduced volatility of stocks and bonds, the drop in oil prices, and the weakening of the US dollar have benefited the leading cryptocurrency.
Noelle Acheson, former Director of Market Insights at Genesis, argues that restoring Bitcoin's liquidity is key as no other risk asset has experienced such a significant downturn as the leading cryptocurrency. "The BTC narrative is multifaceted; this also provides solid support for its floor. For some, it is a store of value; for others, a liquid early-stage tech investment; for many, pure speculation, partially driven by narratives fueled by the first two. Complicated and fascinating," she explains.
Joey Krug, Chief Investment Officer at Pantera Capital, stated in an interview on CoinDesk TV that the market already bottomed out last summer, and this rebound confirms the recovery. "Markets are likely to continue to suffer pullbacks as inflation is not rising as fast as expected. My view is that things were oversold last summer and are finally recovering. The second half of the year will be bullish for cryptocurrencies. Most people who intended to sell crypto have already sold," he emphasized.
In the rest of the market, there are general gains. Binance Coin (BNB), Ripple (XRP), Cardano (ADA), Polygon (MATIC), Dogecoin (DOGE), Solana (SOL), Polkadot (DOT), Shiba Inu (SHIB), and Litecoin (LTC) are up more than 3%, with some reaching gains of up to 10%.