Why bitcoin has been soaring for a few days

Why bitcoin has been soaring for a few days

The queen of cryptocurrencies has been trading for several days above 20,000 dollars, at its levels of last November.

The price of bitcoin has been surging for several sessions, rekindling embers in the gloomy cryptocurrency market since the failure of the FTX platform, although some observers are urging caution. By crossing the cape of 20,000 dollars to 20,845 dollars on Monday morning, bitcoin gained 5.2% compared to Friday evening and returned to its November level, before the setbacks of FTX.

The cryptocurrency market has risen above the symbolic cap of 1,000 billion dollars in valuation, according to the Coingecko site, which lists the price of more than 12,000 cryptoassets. Bitcoin is not the only market to start 2023 on a high note: the stock markets are back to their levels of more than a year ago, before a difficult year 2022, marked by the Russian invasion of Ukraine. Some indices, such as Britain’s FTSE 100, are even approaching their all-time highs.

Slowdown in the United States

“A mix of news, including slowing inflation in the United States, made the markets happy,” notes Simon Peters, analyst at eToro, who points out that over the last few sessions, “the revival of crypto-assets has been much more energetic than that of other asset classes”.

For Charlie Morris, analyst at ByteTree, bitcoin tends to rise when the dollar falls, which has been the case for several months: “In past years, a fall in the dollar meant a surge in bitcoin. The correlation is now less strong , but it exists,” he said. Bitcoin therefore benefits from lower inflation in the United States, which leads investors to bet on a slowdown in rate tightening by the United States Federal Reserve (Fed), which in turn makes the dollar less attractive.

“It’s ironic, bitcoin seems to have gone from anti-inflation value to its opposite,” said Jim Reid, analyst at Deutsche Bank.

Protect yourself from inflation

Some followers of bitcoin believe that, since its issuance has been limited since its inception, unlike currencies issued by central banks, it can be considered as a means of protecting against inflation. Despite the recent rebound in prices, the size of the market remains three times smaller than at its peak in November 2021, and the trading platforms, these buying and selling sites at the heart of the sector, remain in a difficult situation. .

Former FTX boss Sam Bankman-Fried, indicted on charges including fraud in the United States, last week accused his rival, Changpeng Zhao, Binance’s chief executive, of orchestrating “an extremely effective public relations campaign during several months” aimed at destabilizing FTX. Other major exchanges have announced drastic staff cuts, such as Crypto.com, which on Friday announced a “20%” reduction in its number of employees, in the wake of a similar announcement from Coinbase. , which parted ways with 950 employees.

Pauline Armandet with AFP

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