Crypto Market Crosses $1 Trillion For First Time In Months As Bitcoin Recovers From FTX-Driven Crash
Bitcoin hit a two-month high over the weekend as crypto continues to rebound from a crash following the stunning collapse of industry titans FTX and Alameda Research, though looming macroeconomic concerns may soon eat into crypto’s gains.
Bitcoin traded as high as $21,325 late Sunday, its first time over $21,000 since November 5, the day before Binance CEO Changpeng Zhao said his exchange sold all of its holdings in rival cryptocurrency exchange FTX’s token following a report on the questionable finances at FTX and Alameda, setting forth the firms’ unraveling.
Relatedly, the combined market value of all cryptocurrencies passed the $1 trillion threshold for the first time since early November, according to CoinGecko, sitting at $1.02 trillion on Monday.
Bitcoin—the world’s most valuable digital asset—pared gains slightly Monday, trading at $21,108 as of Monday at 12:45 EST, but bitcoin is still up 27% since the start of 2023, while Ether, the second valuable crypto coin by market value, is up 30% year-to-date.
The jump comes during a broader boom for equities, with the S&P 500 up 4.6% in 2023, as more and more data indicates inflation is cooling, which investors hope will cause the Federal Reserve to in turn take its foot off the interest rate hike pedal.
Crypto is the “biggest winner” during the current “boost in risk appetite,” OANDA analyst Craig Erlam wrote in a Monday note, cautioning it remains unclear if this is a true “resurgence or just a brief rebound.”
Bitcoin peaked at over $65,000 in November 2021, while the total crypto market peaked at just over $3 trillion at the same time. Digital assets cratered in value in 2022 during a broader downturn caused by several interest rate hikes from the Fed, causing investors to largely turn their back on risk-sensitive assets, and a breakdown in trust in the crypto industry as several major crypto players went bankrupt. Despite its recent spike, Bitcoin is still down 51% from this point in 2022.
The recent spike in equity prices will soon “hit an air pocket and end up looking premature,” JPMorgan Chase analysts led by Mislav Matejka wrote in a recent note, adding the “market is behaving as if we were in an early cycle recovery phase, but the Fed has not even concluded hiking yet.”