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Following a strong performance in US markets to close last week, Bitcoin’s daily trading session ended above $17,000 per bitcoin on Sunday for the first time in almost a month.
The cryptocurrency, selling for about $17,200 per bitcoin, has been accompanied by a tiny increase in volatility after years of historically low volatility and a small amount of daily trading activity on the major exchanges.
The majority of the top 20 cryptocurrencies have done the same, with Cardano and Solana posting the most significant gains of more than 19% and 20% respectively, within the past 24 hours. The latest dog-inspired meme currency, BONK, attracted speculators back to Solana last week.
Since Dec. 13, when it rose 3.5% on the day to hit a top of $18,373 the following day, Bitcoin has not traded at these levels. Due to the present adverse market environment and pressure from the sell-side, the cryptocurrency saw a significant sell-off on December 15.
Kurt Grumelart, special projects head at trading company Zerocap, told Blockworks that “over the course of last week, we noticed greater passive liquidity” as seen by deeper order books and narrowing bid/ask spreads in the middle of the week.
The outperformance in several crypto market segments, according to Grumelart, is supporting prices and driving important storylines. Among these are liquid staking futures, which have seen “significant rallies” in anticipation of the rollout of Ethereum’s Shanghai upgrade in the first quarter, which will allow staked ether withdrawals.
DeFi-related assets saw a modest rise along with an increase in the sector’s total market capitalization, which rose on Sunday by 3.3% to $885 billion.
Curve (CRV) and Maker (MKR), which are in the top 10 in Messari’s DeFi assets category, have increased by 15.7% and 9% over the past day by 15.7% and 9%, respectively. Following the collapse of FTX, there has been a general trend away from centralized to decentralized companies, which is boosting the value of the industry, according to Clearpool CEO Rob Alcorn.
“A whole generation of crypto goods and protocols will be characterized by their capacity to recover from last year’s stress testing and re-emerge as crucial market infrastructure to guide a more compliant sector into the next bull market,” Alcorn added.
US equities and global markets rise before bitcoin
Traders were mostly driven by expectations that the US Federal Reserve will ease off on interest rate increases as they observed indicators of sluggish wage growth and a decline in services activity.
The Federal Open Market Committee meeting later this month is expected to announce a trimming of the Fed’s upcoming rate rises from 50 basis points to about 25 basis points.
On Friday, US stocks saw their greatest day performance in more than a month, with the Dow Jones Industrial gaining 2.1% to 33,630 and the S&P500 increasing 2.3% to 3,895. Since November 30—37 days ago—those were the greatest daily gains for US stocks.
The ASX index in Australia increased by 0.6% to 7,153, the Nikkei 225 index in Japan also increased by 0.6% to 25,973, and the German DAX opened up by 0.3% in the first hour of Monday trading in Europe. So far, Asian markets have responded favorably to the strong US advances.
The macro climate has resulted in an increased demand for risk assets like cryptocurrency due to better-than-expected nonfarm payroll numbers (NPF), which measure the US labor force without farmers and certain other sectors, according to Grumelart.
With these forces at play, he claimed, “the digital asset area is positioned to benefit from a more positive start to the year from a macro standpoint.” Although significant market obstacles, such as the resolution of the FTX fiasco, will probably depress prices in the immediate future.