- Bitcoin is unable to climb above the $25,000 level.
- Ethereum has also gone down a little after testing the $1,700 price level.
- The CPI report for January came out on February 14th. Inflation went up 0.5% from the previous month (0.4% was expected), and 6.4% from the previous year (6.2% was expected).
- On February 20, Hong Kong’s Securities and Futures Commission proposed a new crypto license system that would require all centralized exchanges in the area to get a license from the regulator.
The cryptocurrency market went up by more than expected on Wednesday(15th Feb) and Thursday(16th Feb) last week. This happened after US inflation data showed that prices had gone down for the seventh straight month. Ethereum also reached a six-month high of nearly $1,700 and Bitcoin reached a six-month high of $25,300.
According to data released on Wednesday, US inflation fell for the seventh straight month in January to 6.4%. It has dropped a lot since June 2022, when it was 9.1%. The sudden upward movement was prompted by a rally in “risk-on” assets following US consumer data that suggested sentiment remained positive and there is a greater likelihood of a soft landing. However, after the Securities and Exchange Commission (SEC) fined Kraken $30 million, the regulatory environment in the US cryptocurrency market has become more tightly regulated.
The CPI report for January came out on February 14th. Inflation went up 0.5% from the previous month (0.4% was expected), and 6.4% from the previous year (6.2% was expected). If you take out the costs of food, energy, and shelter, the rate of inflation was 0.2% per month and 4% per year. Even though inflation is still going down from recent highs of more than 8%, it is still very high and surprising to the upside this month. Even so, rates are likely to reach their highest point this year, whether that’s closer to 5% or 7%.
China-related Token Narrative:
China-related tokens are currently flying to the moon. In the past week, Conflux (CFX) has increased by more than 450%, NEO by more than 50%, and Filecoin (FIL) by more than 60%. The Securities and Futures Commission (SFC) of Hong Kong has begun a consultation process to license cryptocurrency exchanges that will cater to retail investors. A plan for professional (accredited) investors’ consultation that the SFC has been working on for the past few years launches on June 1.
Stablecoins are also scheduled to be regulated in the city, and it’s likely that local institutions and trusts will be used. According to reports, representatives from China’s Liaison Office have visited conferences and meetups in the City in an effort to learn more about Hong Kong’s progress with cryptocurrencies. The announcement that Conflux is collaborating with China Telecom to develop blockchain-based SIM cards, complete with all the Web3 terminology to get people excited like metaverse and proof of work, has been credited in part for the company’s sharp rise. It will be a while before Hong Kong permits retail cryptocurrency. The launch will take place in a controlled environment even though authorities are only in the consultation phase.
Bitcoin Price Analysis:
Bitcoin increased by over 10% last week and is currently trading close to the $25,000 psychological resistance level. For the past four days, it has been trading in close proximity to the $25,300 strong overhead resistance. The bulls are still in it even though the bears have successfully defended the level. Once more seizing the chance, they attempted to break above the $25,300 yesterday. As Asia’s business day gets underway, Bitcoin, which has decreased 2% over the past 24 hours, fell below $24,000.
However, as Asia’s business day officially begins, Bitcoin has fallen below $24,000, losing 2% over the previous 24 hours. If the downward trend persists, the first support level is at $23,500, followed by $22,600. To stop the bullish momentum, sellers will need to quickly drag the price below this support. At that point, the pair might drop to $21,300. However, if the price rises above $25300 and holds there, the BTC/USDT pair may gain momentum and quickly approach the $27,000 price level.
BTC and ETH have done much better than other asset classes since July 1, 2022, even though November was a horrible month. Also, correlations between BTC and U.S. stocks have been getting stronger lately, with the 30-day correlation for all of 2023 stabilizing at levels not seen since late December 2021. In the past week, there has been more and more talk about how Asian flows are driving the market’s strength. The story spread after there were signs of more positive crypto regulations in Hong Kong. Over the last ten years, crypto has been one of the best-performing asset classes, even though it has faced challenges like the COVID-19 crash and the 2018 tech wreck. By many measures, crypto has been adopted as quickly as the internet, and its uses have grown quickly to include things like remittances and collectibles. The short-term trend is favourable for cryptocurrency.
As with past crashes, the recent crash has made some people wonder if crypto will continue to be used quickly in the future. The hash rate in terahash/second (the purple line) has steadily gone up and is now at its highest point ever. A higher hash rate leads to more mining and better network security. Even though Bitcoin’s price went down last year, it has been one of the best-performing assets, and the story about Bitcoin being a stable, decentralized, and scarce asset hasn’t changed at all. Even though there is some evidence that high inflation is bad for Bitcoin, the Bitcoin network has continued to grow quickly even after its recent price drop.