Bitcoin price soars nearly 25% in a week

16 Jan 2023

Bitcoin surpassed the $21,000 level early on Monday, a significant hike compared to the $16,000 low registered at the beginning of the year. 

The world’s largest cryptocurrency by market capitalisation soared nearly 25% in a week to $21,069. Just a week ago, Bitcoin was trading around the $17,000 level. 

The price increase was also seen in the price of other cryptocurrencies, Yahoo News reports. The world’s second-largest cryptocurrency, Ethereum, rose 20% in a week to $1,564, reaching a two-month top over the weekend. 

Solana registered the largest gains, with a 62% increase in the week to $23.31. On Saturday alone, SOL enjoyed a 30% rally, Proactive Investors reports. The challenge now for Solana is to make the most of this increase, following the disappointing blockchain performance last year, several reports of hacks and the exposure to the collapsed FTX exchange. 

At the start of the week, the total cryptocurrency market capitalisation stood at $1.02 trillion, representing a 1.2% gain in 24 hours, as per Coingecko data.

This fresh capital inflow in the crypto sector comes during renewed investor confidence that the Federal Reserve could be easing back on inflation without placing the economy into recession.

Continuous central bank rate hikes resulted in fears liquidity would dry up and lead to economic stagnation and a fall in economic output.

However, there have been recent indications of a reversal. U.S. consumer prices have risen by just 6.5% last month compared to the previous year.

The inflation rate declined over the past six months of last year after reaching a peak of 9.1% in June.

Over the coming months, the crypto market is hoping for a less hawkish stance from the Federal Reserve, with the possibility of a reduction in rate hikes. 

That said, despite the price increase slowdown, inflation is still hovering close to a four-decade high. The World Bank is also still pessimistic in regard to the impact of ongoing monetary policy tightening across the globe. 

The World Bank said in a report published last week: “Although this tightening has been necessary for price stability, it has contributed to a significant worsening of global financial conditions, which is exerting a substantial drag on activity.”