Bitcoin jumps above $18,000 to its highest level in one month

Bitcoin on Thursday rose to its highest price in nearly a month, as traders bet on a cooling of US inflation and digested news that lawyers for defunct crypto exchange FTX found billions of dollars worth of assets.

The world̵[ads1]7;s largest digital currency climbed above $18,000 for the first time since December 14 late Wednesday, gaining about 5% in value over the past 24 hours. Bitcoin was trading at $18,154.35 as of 5 a.m. ET Thursday morning, according to CoinMetrics data.

On Wednesday, lawyers for collapsed crypto exchange FTX said they had found about $5 billion in “liquid” assets, including cash and digital assets. The recovery will be a welcome boon for FTX customers after the crypto exchange imploded in November.

Still, FTX lawyers warned that the $5 billion cache was so high that selling the assets could put significant downward pressure on the market, reducing its value.

“Bitcoin has been in a downtrend for over a year now, which is a standard period for a crypto bear market,” Vijay Ayyar, vice president of corporate development and international at crypto exchange Luno, told CNBC in an email Thursday morning.

“We’ve had a lot of negative events happen over the last year, and if you look at the price reaction to those events, it’s generally been less and less — an indication that the market is taking the news pretty well, selling pressure is being absorbed, and therefore going we to an accumulation stage,” he added. “This could also mean that the market thinks the worst is over for crypto and that most of the negative news is now priced in.”

US inflation data due on Thursday is forecast to show a softening of inflation. Economists polled by Dow Jones expected the consumer price index to fall 0.1% month-on-month in December.

Inflation is still expected to rise by 6.5% year-on-year, although this will be down from a jump of 7.1% in November and well off a peak rate of 9.1% in June. Investors hope the decline could put pressure on the US central bank to reverse interest rate increases.

The Fed and other central banks have raised interest rates over the past year or so in an effort to curb soaring inflation — moves that forced stocks and cryptocurrencies down sharply in 2022.

The hope now is that the central bank will cut the interest rate, and put some pressure on risk assets.

“Today’s CPI numbers can be quite telling and a hot CPI print can definitely throw a wrench in the works for risk assets like crypto,” Ayyar said.

That or additional negative news in crypto could cause the price of bitcoin to slip below $17,000, Ayyar warned, setting the stage for further declines and a potential fall of the digital asset into a range of $12,000 to $14,000.

Bitcoin is down about 74% from its November 2021 record high of $68,990. Last year, nearly $1.4 trillion in value was wiped from the cryptocurrency market as traders dumped risky assets like technology and growth stocks.

Bitcoin and the broader digital currency market also fell, suggesting increasing correlation with major stock benchmarks such as the Nasdaq Composite.

The plunge was also caused by crypto-specific issues, including the collapses of projects and companies such as FTX and Terra.

However, Bitcoin has started 2023 on a positive note, with its price rising steadily over the past 12 days.

Other digital currencies were boosted by jumps in bitcoin prices on Thursday. Ether, the second largest coin, rose nearly 5% to $1,397.78 while Binance’s BNB token rose 3% to $283.

Binance CEO Changpeng Zhao told CNBC on Wednesday that the exchange plans to increase hiring by 15% to 30% in 2023, in stark contrast to other exchanges that have cut jobs.

Binance, which previously earmarked $1 billion for a fund aimed at propping up the industry after the collapse of FTX, has itself been plagued by fears about the solvency of its reserves. The auditor working with the company’s so-called proof of reserves, Mazars, stopped all work with crypto companies in December.

Binance says it has more than enough assets to cover liabilities.