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Bitcoin increased its gains over the weekend leading up to the Lunar New Year and Spring Festival celebrations in Southeast Asia, hitting its highest level since August.
The number one cryptocurrency topped $23,000 on Saturday, up 10% from the previous day, according to data from CoinMarketCap. The cryptocurrency hit a high of $23,282, a level that has not been seen for more than five months. At the time of writing, Bitcoin is trading around $22,900, which is a near-stable level over the last day.
Ethereum, the second-largest cryptocurrency, also posted strong gains, hitting a local high of around $1,674, a level not seen since last September when the expected Merge upgrade was reached. The total market capitalization has crossed the $1 trillion mark.
The rise came as bitcoin performed historically well at the start of the Lunar New Year holiday celebrated across much of Asia, often referred to as the Chinese New Year. According to Markus Thilen, head of research at Matrixport, the Lunar New Year holidays are considered a good time for investors to enter. He decreed:
“Buying bitcoins at the end of the first day of the Chinese New Year and selling them 10 days later would average +9%, and the last eight years (2015-2022) have shown positive returns. attractive entry time for long positions.”
Bitcoin and Ethereum are up around 38% and 35% year to date. While many factors could have contributed to the impressive start to the year for cryptocurrencies, the market managed to gain momentum after the US Department of Labor released new data last week that indicated a slowdown in inflation.
Annual inflation fell to 6.5% in December from 7.1% in November. Lower inflation is generally considered bullish for risky assets like cryptocurrencies as it puts pressure on the US Federal Reserve to slow down interest rate hikes.
Crypto bulls (bulls) expect the market to continue its bull run, Sean Farrell, Head of Digital Asset Strategy at Fundstrat, predicts that Bitcoin will reach between $35,000 and $44,000 this year, and Ethereum between $2,400 and $3,200. However, he still warned investors to beware of short-term risks. He decreed:
“Despite our view that all-time lows have been reached for major cryptocurrencies, we believe there are some short-term risks to be aware of. These include implications related to the GDC, a new attack on risky assets at the upcoming FOMC meeting. and the fact that, despite the recent rally, we are still in the middle of what we consider to be a chain bear market.”
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