Bitcoin, the largest coin by market cap, has rallied over 40% so far in 2023, bouncing from the lows of the $16,000 mark toward the five-month highs of $23,000-$24,000 at the end of January.
BTC/USD pair, Daily chart
The leading cryptocurrency hasn't given investors such an uplifting January since 2013, while it also posted its best month since a 40% rally in October 2021, when prices jumped above the $60,000 level.
Hence, the return on crypto buying has pushed the total market capitalization for cryptocurrencies to move above the $1 trillion key psychology level, according to Coinmarketcap, while the global crypto volume has risen to $5.5 trillion, which is up 61% since the beginning of the year, according to crypto indexing platform Nomics.
Bitcoin had a rough time all throughout 2022, falling from the record highs of $64,000 to multi-year lows of $15,000, helped by a large number of long liquidations and short selling that were fuelled by a variety of bankruptcies in the crypto ecosystem.
Bitcoin soars over 40% in January on Fed expectations:
The rally in risk-sensitive cryptocurrencies was driven by expectations of a Federal Reserve pivot to slower interest-rate hikes as inflation continued to cool.
The Fed is widely expected to announce a 25-basis point rate increase later today at the end of its monetary policy meeting, increasing the Fed funds rate to a 4.5%-4.75% range.
Market participants expect another 25-basis point rate in March, to 4.75%-5%, but then investors are leaning toward no more hikes.
Investors will be also focused on Fed Chair Jerome Powell’s comments for any signal about a pause in the tightening cycle, future rate hike outlook, inflation, and economy, which could weigh on the dollar and the market risk sentiment.
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