After seeing its value plummet 65% last year, Bitcoin has turned it around so far in 2023, jumping above the $23,000 mark briefly over the weekend for the first time since last August.
The world’s most popular cryptocurrency had traded consistently below $20,000 for most of January—a stark difference from how it started off 2022 at around $47,000—but the weekend rally is giving investors hope that the coin has reached its bottom. Year to date, the crypto token is up about 39%.
The digital currency slightly pared back its gains on Monday morning ET, trading around $22,855 according to CoinMarketCap.
Bitcoin’s weekend recovery comes as some economists strike a more optimistic view of the economy after months of downbeat predictions. In a tweet on Jan. 13, former Treasury Secretary Larry Summers said, “the Fed's job feels much, much closer to being done,” after the central bank raised interest rates repeatedly in 2022 in an effort to curb inflation. Its efforts seem to have paid off for now, although other experts still believe inflation could be hard to bring down to the Fed’s 2% target.
I would stick with my view that a recession this year is more likely than not. But certainly looking at some of these trends, one has to think that the Fed's job feels much, much closer to being done. We will be watching the data closely. @BloombergTV https://t.co/bu0kKEbSrA
— Lawrence H. Summers (@LHSummers) January 14, 2023
Adding a wrench to Bitcoin’s ability to sustain its recent rally are the ripple effects of crypto exchange FTX’s collapse. The exchange collapsed in November, and now owes an estimated 1 million creditors a cumulative $3.1 billion.
Still, some investors seem to be eagerly optimistic, despite some of the setbacks in the industry. After losing more than $2 trillion in value and falling from the ranks of trillion dollar asset classes, crypto regained that status in recent weeks.
#Bitcoin market cap now higher than Tesla’s. 🚀 pic.twitter.com/L9P5HCu2ka
— Bitcoin Archive (@BTC_Archive) January 22, 2023
Bitcoin also saw inflows of $5.7 million last week, according to data from digital asset investment and trading group CoinShares. Digital asset investment products saw inflows of $37 million total last week, although the majority of that money was designated for products that help investors short, or bet against, the price of cryptocurrencies.
The second most popular crypto, Ethereum, saw inflows of $4.2 million and has seen inflows of $6.8 billion year to date, according to CoinShares. The crypto reached $1,674 on Saturday, according to CoinMarketCap, the first time it had gone above the $1,600 mark since last November.
The cryptocurrency was still trading above that level on Monday morning, at $1,617.
