On February 16, the crypto suddenly soared. Thus, the global market capitalization of digital assets rose 8,3% to $1.11T in the last 24 hours. The last time there were such results was in mid-August 2022. Let’s talk about why crypto went up today below.
Bitcoin was the first to show growth, rising by 11,24% per day from $22,130 to $24,618. After that other coins also rallied. Here are four reasons why the market grew.You have not selected any currency to display
US inflation decline
At the beginning of 2023, inflation fell from 7,1% to 6,5%, which triggered the growth of the whole market. On February 16, it became known that the figure had fallen by another 0,1%. The U.S. Bureau of Labor Statistics then released a report on the Consumer Price Index (CPI), which they said increased to 0,5%, up from 0,1% in December.
Inflation, in turn, declined due to the actions of the U.S. Federal Reserve System, which is raising its key rate for this purpose. The last time the regulator increased the rate was in early February, from 4,5% to 4,75%. And, as a rule, if the rate goes up, cryptocurrency falls, but this time the market went up, as most participants in the crypto world predicted the Fed’s solution.
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Though not everything went as expected, according to experts’ estimates, inflation was supposed to fall to 6,2%. However, this bar is likely to be reached. In his statement, Fed head Jerome Powell said that they would aim to bring inflation down to 2% by raising the rate.
Ordinals: new interest in Bitcoin
The growth of Bitcoin and, with it, other cryptocurrencies, could also be affected by the Ordinals project, whose developers figured out how to create NFTs in the Bitcoin blockchain.
The way it works is that NFTs are minted directly in the Bitcoin blockchain, whereas, for example, non-fungible Ethereum tokens are created externally to the network and rely on external token standards. Specifically, the ERC 721 standard is used to create collections. That is, they do not need a separate token, side chains, or changes in the Bitcoin network to create them. In addition, since Bitcoin-NFTs are minted on the blockchain, all information stays there and does not change. Ethereum’s NFT, on the other hand, can be changed using metadata.
Ordinals has its own cryptopunks one of the most popular NFT collections called Ordinal Punk NFT. According to CoinDesk, one of these tokens was sold for 9.5 BTC (~$206.6K) on February 9. On the Ethereum network, the last most expensive CryptoPunk was sold for 124,457 ETH (~209.18M).
However, Ordinals is still a new platform, and its structure for buying and selling tokens is limited. This means that so far all transactions have taken place without intermediaries. Therefore, it is impossible to count the total number of NFT owners yet, and there is a high probability of facing fraudsters.
Do you think NFT on Bitcoin has a chance to surpass NFT on Ethereum?
Bitcoin hash rate is rising
Hashing speed the unit used to measure the processing power of cryptocurrency mining equipment (mining) Bitcoin’s increased by 36,65%, from 317,28M TH/s.
In simple words, this indicator affects the chances of miners mining cryptocurrencies. Hashrate affects the market. The dependence is as follows: the higher the hash rate of the network, the higher the cost of mining Bitcoin.
Bitcoin’s hash rate dropped from 311M TH/s to 224.96 TH/s (-38,25%) between January 29 and 30, which may have affected the value of the asset. According to CoinMarketCap, the coin’s price fell from $23.689 to $22.737 (-4,19%) on those days.
Funds poured $1.6B into the crypto market — Lookonchain theory
Lookonchain specialists analyzed data on USD inputs and withdrawals at Circle and found out that since February 10, several funds/institutions withdrew 1.6B USDC and invested only 0.2B USDC.
According to their data, the mysterious fund did not stop pouring money into the market when cryptocurrencies fell. Thus, his address “0x398F” has withdrawn 155M USDC from Circle and transferred it to exchanges since February 10.
“And it seems that this mysterious fund also withdrew 397M USDC from Circle through another address, ‘0xad6e’ and transferred to exchanges since February 10. Because both addresses transferred USDC to exchanges through the same addresses,” said the analysts.
After that, another fund “0x3356″ withdrew 953.6M USDC from Circle and transferred it to exchanges. The researchers think that today’s rise in BTC prices has something to do with this fund.
— Lookonchain (@lookonchain) February 16, 2023
This time it will not be about Elon Musk, who is always influencing the value of stocks with his statements. Usually after his words, “dog” tokens rise or fall. Now, the Matrix star Keanu Reeves gave his opinion, calling cryptocurrencies an amazing tool for exchanging and distributing resources.
“I think the principle, the ideas behind an independent currency, are amazing. These are amazing tools for exchanges and distribution of resources. So to pooh-pooh crypto, or the volatility, it’s only going to make it better in terms of how it’s safeguarded,” he said.
There is a possibility that a star of this size could have influenced the growth of the market. Don’t you think so?
However, there are reasons to believe that the rally will continue. Thus, the head of hedge fund Pantera Capital, Dan Morehead, believes that the bearish phase in the cryptosphere ended in November 2022. As a result, speculators and investors who feared market volatility left the market.
In addition, he believes that Bitcoin will soar to $200K in a new bull cycle because people and huge market players will invest even more in cryptocurrencies.
And whether it is worth investing in cryptocurrencies, in which large funds invest, we reported here.
Which of the above causes do you think is the most likely? Maybe all of them at once? Write about it in the comments.