Bitcoin extended its gains over the weekend ahead of the Lunar New Year and Spring Festival celebrations across Southeast Asia, hitting its highest level since August.
The number one cryptocurrency surged above $23,000 on Saturday, gaining up to 10% at one point from the previous day, according to data from CoinMarketCap. The crypto hit a high of $23,282, a level not seen in over five months. At the time of writing, Bitcoin is trading around $22,900, an almost flat level over the past day.
Ethereum, the second-largest cryptocurrency, also saw strong gains, hitting a local high of around $1,674, a level not seen since September last year when its Merge upgrade both expected has been achieved. Total market capitalization has passed the $1 trillion mark.
The rise came as Bitcoin historically performed well at the start of the Lunar New Year holiday celebrated across much of Asia, often referred to as Chinese New Year. According to Markus Thielen, Head of Research at Matrixport, the Lunar New Year holiday is seen as a good entry time for investors. He stated :
“Buying Bitcoin at the end of the first day of Chinese New Year and selling them 10 days later would have returned +9%, on average, with the past eight years (2015-2022) all showing positive returns. Chinese Year has been an attractive entry timing for long positions."
Bitcoin and Ethereum are up around 38% and 35% since the start of the year. While an array of factors may have impacted the crypto's impressive start to the year, the market managed to gain momentum after new data released by the US Department of Labor last week indicated a slowing inflation.
The annual inflation rate fell to 6.5% in December from 7.1% in November. Lower inflation is generally seen as bullish for risky assets like crypto, as it puts pressure on the US Federal Reserve to slow interest rate hikes.
Crypto bulls (bulls) expect the market to continue its bullish move, Sean Farrell, Head of Digital Asset Strategy at Fundstrat, expects Bitcoin to hit 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 stated :
“Despite our view that all-time lows for major cryptos have been reached, however, we believe there are some short-term risks to remain aware of. These include GDC-related fallout, a renewed attack on risky assets at the next FOMC meeting, and the fact that despite the recent rally, we are still in the midst of what we consider to be a chain bear market."
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- To buy cryptocurrencies in the SEPA Zone, Europe and French citizens, visit Coinhouse To buy cryptocurrencies in Canada visit BitbuyTo secure or store your cryptocurrencies, get a Ledger walletTo transact your cryptos anonymously, install the NordVPN app
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