For the first time since June 13, Bitcoin was able to surpass $25,000. This occurred over the course of two days on Saturday and Sunday. This was only a temporary rise, though, as by Sunday morning its value had returned to $24,510.
Even if it was just momentary, the initial cryptocurrency’s energy surge is evidence that the market is indeed rebounding strongly as a result of both the announced major Ethereum update and more recent than anticipated US inflation data.
The $25,000 Cap: A Crucial Bitcoin Resistance Level
Early on Sunday, the biggest cryptocurrency, Bitcoin, saw a 2.2% increase in value to $25,031. Given that Bitcoin had been trapped below $25,000 for weeks, this incident was fairly crucial.
Since this incident, BTC has dropped once again and is now, according to CoinMarketCap, trading at roughly $24,176. According to a number of experts, this continued price decline is a clear indication that the $25,000 mark continues to be a significant resistance level for Bitcoin at the time. BTC should be able to grow more gradually and continuously after the latter is fully crossed.
After some research, it was discovered that whereas Ethereum, the second cryptocurrency, increased by 16% within the same time period, Bitcoin only had a gain of about 5.85%. The latter is also experiencing significant growth in preparation for the future merger of its network toward a paradigm that offers more scalability and greater ecological awareness (The Merge).
Why has the price of Bitcoin risen so quickly?
There is no doubt that the first half of this year has been extremely difficult for cryptocurrencies. An issue that is somewhat related to the Federal Reserve raising interest rates significantly to combat persistently rising inflation.
Following this increase in rates, the cost of Bitcoin, Ethereum, and other tokens immediately dropped by more than 50%. Therefore, a number of factors can be used to account for the increase in value that Bitcoin has experienced recently.
The US inflation statistics from last week far fell short of analyst predictions. This rise is therefore mostly a result of the economy’s reduced impact of inflation.
The leading economic indicator did not change over the past month, despite the Federal Reserve raising interest rates, which seem to be countering the rise in prices. While other riskier assets, including the Nasdaq 100 index, had high increase at the same time, several cryptocurrencies, including Bitcoin, benefited from the news.
Naturally, we must also take into account the fact that the cryptocurrency market has historically been somewhat unstable and that investor trust has occasionally been shaken, particularly in the wake of Terra Luna’s collapse in May of last year.
What does the future hold for cryptocurrencies like Bitcoin?
Rising inflation has had a significant impact on the entire market of the global economy, from securities like stocks and bonds to virtual currencies like Bitcoin. A prospective global recession’s impending appearance hasn’t done much to improve the situation. Long seen as a superior hedge against the inflation crisis, bitcoin has had its status as “anti-inflationary digital gold” tested this year.
Fortunately, a slower rate of inflation may allow the Federal Reserve to tighten monetary policy more gradually. For many in the cryptocurrency community who had been seeing prices fall since the beginning of the year, this, if fleeting, ascent of the wedge beyond the $25,000 level is a particularly encouraging news.
The worst of the industry’s turmoil is now behind us, according to billionaire investor Mike Novogratz. He claims that even while it is true that the market’s present issues have heightened investor skepticism, the case for Bitcoin is still compelling. It is challenging to overlook an asset that consistently ranks first in the market.
It should be noted, though, that despite recent signals of a potential uptick, Bitcoin is still down 64% from its alleged all-time high of $69,044.77 from November 2021.
