Despite several important signs showing that a bull run is now underway, analysts seem to be split on the subject.
It is no secret that the world economy has become worse over the previous 12 months. The United States government reached its "debt ceiling" on January 19, which refers to the maximum amount of money that the U.S. Treasury can borrow to pay for its ongoing federal operations. This has sparked new worries that additional financial hardship and an economic slowdown may be on the horizon.
Similar to the United States, the United Kingdom has also been having trouble. This is demonstrated by the fact that 22,109 firm insolvencies were reported in 2022, a 57% increase from the previous year and the highest rate since 2009. In addition, a recent analysis from the International Monetary Fund predicted that the only other G-7 country to experience a recession this year would be the United Kingdom.
Despite all of this destruction, the cryptocurrency market appears to have gained momentum during the previous month. The overall capitalisation of this industry increased by about 32% in January, from $828 billion to roughly $1.1 trillion. With special attention paid to Bitcoin, the digital currency increased to $24,000 on January 30 after appearing to remain unchanged around the $16,500 mark for the majority of November and December.
In fact, recently, the asset's portion of the market's total capitalisation increased to 44.82%, the highest level since June of the previous year. This figure often increases so sharply only when investors start to reduce their exposure to altcoins and reinvest their money into BTC.
Is Bitcoin's next target $25,000?
Since Jan. 20, Bitcoin has successfully held a price objective of $22,500, and as of right now, it is showing a 30-day profit ratio of almost 40%. Similar increases in the stock market, which recently surged as China loosened its COVID-19 limitations after three protracted years of rigorous pandemic controls, have paralleled this jump.
Additionally, according to information provided by the financial services firm Matrixport, American institutional investors presently account for 85% of all recent Bitcoin accrual operations, indicating that established entities are still interested in the market for digital assets. So, Cointelegraph contacted Timothy T. Shan, the COO of Avalanche-based decentralized exchange Dexalot, to better understand where the sector may be heading in the near future. He stated: "I think the recent gain in Bitcoin has been a wonderful surprise given all the terrible news in the company that hasn't fully played out. However, I don't believe the present gain will last, and users should prepare for increased volatility.”
Similar to this, Frederic Fernandez, co-founder of the DeFi trading platform DEXTools, told Cointelegraph that the crypto sector may experience strong growth in 2019 if and only if the world economy is able to build some type of recovery. This is due to the possibility that a significant trend reversal might raise market liquidity and drive up demand for alternative assets.
If economic uncertainty develops and tight restrictions are put in place, the market may continue to trend downward. But if Bitcoin reaches $25,000, he noted, "that may indicate growing trust and acceptance of cryptocurrencies, which may lead to further investment and widespread use.
Researched Market Sentiment
The market's digital asset investment products had a combined capital inflow of $117 million during the final week of January, the highest amount during the previous 180 days. $116 million of the aforementioned amount was invested in BTC-related offers, which attracted the majority of the capital.
Additionally, the volume of digital investment products has increased steadily, topping the $1.3 billion mark on January 30 and rising 17% over the year-to-date value. However, $4.4 million in monetary inflows were recorded for short Bitcoin contracts, which according to Coishares' experts is not a favorable indicator for investor mood.
Disclaimer: FAMEEX makes no representations on the accuracy or suitability of any official statements made by the exchange regarding the data in this area or any related financial advice.