The crypto market continued to recover in the past week, with Bitcoin and Ethereum rising 10 per cent to $20,943 and $1,550, respectively. The total market cap was up from $907 billion to $975 billion during the week. However, it touched $1 trillion on Thursday, according to data from CoinMarketCap.
There was a blip in the market on Thursday after the US agencies arrested the founder of Hong Kong-based crypto exchange Bitzlato.
“Bitcoin began the week by reaching a new high of $21,000, driven by investor optimism following a report on consumer prices that showed a decrease in inflation numbers for January. This surge also caused the total market value of cryptocurrencies to surpass $1 trillion for the first time since November. Bitcoin and Ethereum reached a two-month high during this period. However, prices dropped slightly on Thursday due to the US government’s crackdown on the Bitzlato exchange and uncertainty surrounding Genesis,” said Alankar Saxena, CTO and co-founder of crypto investment platform Mudrex.
Bitzlato’s founder Anatoly Legkodymov was arrested in the US, allegedly on money laundering charges. The fraud reportedly involves $700 million.
“The other major scare for the markets has been the rumoured bankruptcy of Genesis, crypto’s biggest lender and part of the behemoth, Digital Currency Group. The Genesis bankruptcy still can’t be ruled out completely and we can expect market gyrations around related developments,” said Parth Chaturvedi, crypto ecosystem lead at crypto exchange CoinSwitch.
The exchange has been in trouble since the collapse of FTX last year. It had huge sums invested in the exchange. However, the market rebounded on Friday mainly due to strong US consumer sentiment.
“Bitcoin regained value above $21,000 after experiencing a drop to $20,000 the previous day,” Saxena said.
“The change in commentary from the Federal Reserve holds immense value at this point and for the rest of the year,” said Anurag Dixit, founder of the crypto management platform Kunji.
Solana gained the most in percentage terms, rising over 25 per cent in the past week. As of Friday, it was trading at $21. According to Chaturvedi, this was due to Electric Capital’s Developer report, which highlights the Solana ecosystem’s builder strength.
AI-based projects rally
The week also saw several Artificial Intelligence (AI)-based crypto projects gain, the research team of crypto exchange CoinDCX told Business Standard.
“Certain sectors in the crypto space have outperformed due to certain trends, of which AI based crypto projects have had the most significant rallies after the wide-spread adoption of ChatGPT in terms of unique users leading to Microsoft investing billions of dollars into ChatGPT, setting the stage for a more rapid breakthrough for mass adoption of artificial intelligence related products. AI based projects listed on CoinDCX such as Fetch. AI, Numeraire and PHB have had significant price gains over the past few months in the wake of these developments,” it said.
What to expect next week?
The commentary of the Fed and other central banks will remain crucial for the market.
“If the daily closing value remains above the current level, it may indicate a potential increase to $21,400,” Saxena said.
But he added that if Bitcoin falls below the current level, it would suggest that sellers have more influence, and the correction may continue to the $19,500-$20,000 range.
For Ethereum, the support level is currently at $1,440, with resistance at $1,600.