(Bloomberg) — Bitcoin rose above $21,000 on Saturday amid optimism that it may have bottomed and inflation may have peaked.
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The largest cryptocurrency rose as much as 7.5% to $21,299. It had not topped $20,000 since Nov. 8, and Saturday marked its 11th straight day. The second largest Ether increased by as much as 9.7%, and other tokens such as Cardano and Dogecoin also made solid gains. The total market capitalization of the crypto universe rose above $1 trillion for the first time since early November, according to data from CoinGecko.
The gain came amid a report on consumer prices last week that showed inflation fell in January from December levels. The Federal Reserve is on course to taper to smaller interest rate hikes following the further cooling, although it is likely to continue to increase until price pressures show more definitive signs of abating. That has helped boost risk assets such as the Nasdaq 1[ads1]00 stock index, which has risen for six straight days.
“Cryptoassets performed well after the soft CPI print, suggesting that crypto’s correlation to macro is not going away anytime soon,” said Sean Farrell, head of digital asset strategy at Fundstrat. “This week’s price action follow-through is certainly encouraging,” and with the exception of forced liquidations from troubled crypto company DCG, “the absolute bottom is likely to be in for crypto prices.”
The price of Bitcoin was stuck in a narrow range around $16,000 to $17,000 for several weeks before this latest breakout. The upward moves have surprised shorts — crypto short liquidations have topped $100 million in five of the past six days, according to data from Coinglass. Saturday’s total was the highest, topping $296 million.
“Decreasing CPI combined with the announcement that the FTX liquidators have recovered $5 billion in liquid assets has given crypto markets many factors to forget about the macro picture, which remains bearish,” Hayden Hughes, CEO of social trading platform Alpha Impact, said in a statement Saturday. “Markets have a lot of positive momentum heading into the next FOMC meeting later this month.”
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