Bitcoin, Ether Prices Strong as Markets Eye Easing Rate Hikes

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Cryp­to mar­kets have tak­en a brief reprieve after adding more than 30% to their col­lec­tive cap­i­tal­iza­tion since the start of the year.

Bell­wether cryp­to bit­coin (BTC) rose to a peak of $23,360 on Sat­ur­day — its high­est point in more than five months. BTC sat at $22,900 as of 7 am, ET.

NYDIG report­ed an influx of liq­ui­da­tions on short bit­coin posi­tions over the 10 days lead­ing up to Friday. 

“While the data shows these liq­ui­da­tions occurred dur­ing bitcoin’s biggest price moves, our con­clu­sion is that while liq­ui­da­tions like­ly played a fac­tor in the ral­ly, they are unlike­ly to account for all of the recent price action,” the firm said in its newsletter.

Ether (ETH) also saw a major uplift, gain­ing 7% on Fri­day to fin­ish at $1,650, where it now trades. BTC and ETH are both up around 37% year to date but remain flat over the past six months.

Ethereum devel­op­ers have also begun shift­ing their focus to the Shang­hai hard fork, the next major piece to the Merge roadmap, expect­ed some­time in March. 

Dig­i­tal assets’ total mar­ket val­ue now sits at $1.08 tril­lion, up from $828.6 bil­lion on Jan. 1.

Ethereum’s Shang­hai upgrade, which will enable val­ida­tors to final­ly with­draw their staked ether, should help bring bet­ter price par­i­ty for liq­uid stak­ing deriv­a­tives, Block­works ana­lyst Ryan West said in a research note.

Traders should be aware short-term sell pres­sure may fol­low Shanghai’s launch as stak­ers look to lock in prof­its, he said. Mid-term price action may see a boost from new entrants eager to explore fresh stak­ing opportunities.

Markets go risk on — for now

Appetite for risk-on assets across cryp­to and tra­di­tion­al equi­ties has been buoyed by expec­ta­tions of tight­ened US Fed­er­al Reserve mon­e­tary policy.

Mar­ket par­tic­i­pants are like­ly pric­ing in the chance the Fed will shift its tar­get rate hike by 25 basis points — down from its pre­vi­ous 50 and 75 basis point hikes — at the upcom­ing FOMC meet­ing on Feb. 1.

CME Group’s Fed­Watch tool is now flash­ing a 99.8% like­li­hood of that out­come, which would rep­re­sent slow­ing in the Fed’s infla­tion-curb­ing strategy.

Dig­i­tal assets have con­tin­ued track­ing tra­di­tion­al equi­ties, which closed high­er on Fri­day. The broad S&P 500 index rose 1.9% while the tech-heavy Nas­daq 100 jumped 2.9%.

The 30-day cor­re­la­tion between the S&P 500 and bit­coin is also ris­ing slight­ly after reach­ing one-year lows in late December.

A coef­fi­cient of one means the cor­re­spond­ing assets are com­plete­ly aligned. A neg­a­tive-one read­ing sig­nals the opposite.

Eye­ing the bench­mark for Aus­tralian equi­ty per­for­mance, the S&P/ASX 200 index rose 0.7%, or 5 basis points, to 7,457 on Mon­day. The index is now up more than 7% year to date.

The index, like most oth­er majors across the globe, has con­sis­tent­ly print­ed a high­er high dai­ly close for more than two weeks. Japan’s Nikkei 500 and Nikkei 225 index­es have both gained near­ly 5% so far this year.

Mar­kets across Hong Kong, Tai­wan, Sin­ga­pore, Malaysia and Chi­na were closed on Mon­day, cour­tesy of Lunar New Year celebrations.


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