The cryptocurrency market is surging as bitcoin surpasses the $30,000 mark for the first time in more than two months since the market’s $2 trillion downturn.
The world’s most popular cryptocurrency climbed to $30,056 on January 15, passing its previous close of $28,583.
The price of bitcoin is up 23 per cent from the year’s low of $24,354 on January 1 after suffering devastating losses in 2022, notably following the implosion of popular crypto exchange FTX.
The market lost more than $1.4 trillion in value last year after FTX founder Sam Bankman-Fried’s (SBF) company suddenly collapsed.
The industry’s value stands at $970 billion and more than $72 billion was traded yesterday, according to CoinGecko.
Analyst broker at Oanda, Craig Erlam, said bitcoin has been “lifted out of its pits of despair.”
“Traders may harbour some hope of a move back above US$20,000, a level once deemed a disturbing low but now potentially representing a sign of a revival.” he told Barrons.
Why has the price of Bitcoin risen?
The price of bitcoin improved this week due to economic optimism after the US jobs and Consumer Price Index report found inflation is cooling as the Federal Reserve looks to slow interest rate increases.
Chief strategy officer at crypto asset manager Wave Financial Les Borsai said the recent market surges were a sign “we’ve come close to hitting a bottom for this cycle.”
“We could drop further, I should caution, but the macro environment is showing signs of easing and giving way to a possible market reversal,” Mr Borsai told Barrons.
The chief executive of bitcoin rewards app Lolli Alex Adelman told Forbes that institutional investors, including those in banking and finance, would continue to enter the crypto market.
“Industry leaders that launched crypto services in 2022, like BlackRock, Fidelity and more, set a new crypto-forward precedent for Wall Street which will spur competition among traditional institutions to launch a growing suite of crypto products and services,” he said.
Another reason for global crypto optimism is El Salvador’s decision on January 12 to approve a digital assets law and a framework for their “volcano bonds”.
According to the National Bitcoin Office, the bill will “offer unprecedented consumer protection from bad actors in the ‘crypto’ space while also firmly establishing that we are open for business to all those who wish to build the future with us on bitcoin.”
The legislation also identifies bitcoin as a digital security – providing investors with a contractual claim to the asset – and separates cyrptocurrencies from other financial products, including central bank currencies.
“When we issue the first of the volcano bonds, we will once again be blazing the path forward for this new monetary revolution,” according to The Bitcoin Office.
While bitcoin’s upward moves have many celebrating, the recent surge is lower than bitcoin’s previous highest of just over $80,000 in late 2021.
The price dropped to $70,199 at the end of December 2021 before gradually declining from January to March in 2022 to under $60,000.
Later that year in June the price dropped to under $28,000.