Despite all of the odds, the surge in cryptocurrency prices continues across the board. Bitcoin token managed to reach the value of 21,000 USD, which has not been seen for several months. Ethereum, the second-biggest cryptocurrency in the world, managed to climb steadily as well. It reached 15,000 USD, which is a price range that it last saw back in November 2022. That is generating a huge level of optimism among the cryptocurrency community, especially in terms of a prolonged digital currency recovery. However, 2023 still has an incredibly wasted dark cloud above it, showing all of the signs of an extremely difficult year, including when it comes to the global economy.
Crypto markets, like it or not, are a part of that ecosystem and thus the present relief rally seems like something that is moving on glass legs. But, it has to be said that many analysts believed that the value of 20,000 USD for a BTC token will not be something that the world would see this winter. Yet, here the same price level came and went, giving way to an even higher benchmark. Because of that, the ability of the crypto markets to surprise remains one of the only true constants of the cryptosphere.
The cryptocurrency market began last week in a positive but calm manner. The price of the biggest digital currency token stood at 17,000 USD. That took place after a modest price increase, which followed weeks of hovering and basically sideways trading. Since mid-December, the BTC token remained in the area of 16,000 USD. Five days later, it managed to gain over 20 percent in a lightning blitz toward higher price values. At the same time, the volume of the same digital currency continued to climb steadily as well.
Clearly, 22,000 USD is now in the sights of the bulls, who are also waking up to the frenzy of market activity and moving to act by accumulating even faster. But, the good vibes of this climb in value should not obscure the fact that the BTC token is still far below its highest value of 65,000 USD. It reached that number in November 2021 but now, the token, like the rest of the crypto market, remains in the heart of a brutal bear period and the overall prolonged crypto winter.
Reclaiming 20,000 USD
Not long ago, crypto analysts deemed 20,000 USD as the big psychological barrier that was dividing a failing but recoverable market from the depths of a new and strong slide. The same slide was forecasted to test out the 10,000 barrier, which was and remains the next big logical step in any further decline. But, the same so far did not happen and now 20,000 USD presents a barrier on the road to a potential revival.
For the cryptosphere to continue with this level of optimism, the barrier has to hold for a prolonged period of time. That would also likely include another rise in value that would take over the 22,000 USD line and possibly climb even further. The next week or so will test that theory for sure, but if the 20,000 USD value does not become the new floor, BTC will quickly pivot back into 17,000 USD or so territory. That would also most likely cut any further relief rallies as well to the ceiling of 20,000 USD.
China Opening Up
Most, even though happy with the state of the present recovery, are wondering what is actually fueling it apart from the speculation of investors and traders. However, the factor of the Chinese economy and the country suddenly opening up is apparently crucial. The Chinese economy is one of the largest in the world and is closely watched by investors and traders in the financial domain, including cryptocurrency markets. The health of Chinese finance and the overall economy impacts the cryptocurrency markets in a range of different factors. One is through investor sentiment. If the Chinese economy is performing well, investors may feel more confident in investing in high-risk assets like cryptocurrencies, leading to an increase in demand and a rise in prices.
2023 should be a good period for the risky assets and BTC for one should benefit from that no matter the Chinese factor. However, a well-performing economy in China, which is likely not going to happen this year, should help that. But, even a poorly-performing economy that is open and functioning normally is a boost for the crypto like all other risk-adherent assets. On the other hand, if the Chinese economy is struggling, the same factor can also help the crypto market. That means that investors may become more risk-averse to traditional assets, but still be willing to invest in cryptocurrencies, as a means of diversifying their portfolio and offloading some regular assets that are nose-diving.
The US traditional markets saw a lot of activity last week as well, showing yet again a high level of correlation between these and the crypto domain. S&P 500 for example gained over 2 percent in the wake of the Q4 earning season starting and the US inflation remaining in a downward trajectory. The S&P 500 and the cryptocurrency market are not directly aligned, but they can definitely be influenced by some of the same factors.
For example, investor sentiment and risk appetite will impact both markets in a decisive manner, as is happening now. When investors feel confident and are willing to take on risk, they may invest more in stocks and cryptocurrencies, leading to an increase in prices. Now, experts are predicting that even with all of the negative macro factors taking place, like the energy crisis and the war in Ukraine, the coming year will look a lot more normal than in 2022. That means that esports competitions might embrace digital currencies once more and that crypto whales might decide to join the present rally. These and other options offer hope that the present crypto surge will continue.