Bitcoin prices climbed back above $20,000 on Friday, following a larger recovery in risky assets as the dollar fell from 20-year highs.
By 01:23 ET (05:23 GMT), the price of the world’s largest cryptocurrency rose nearly 6% to $20,455.4, recovering from levels approaching its 2022 lows. This week, the token was projected to gain nearly 6%.
This resulted in the total crypto market capitalization briefly surpassing $1 trillion.
Bitcoin’s recovery was mostly fueled by the dollar’s decline, which accelerated from a 20-year high reached earlier in the week. The dollar got weaker when Treasury yields went down and the European Central Bank raised rates more than expected.
Other cryptocurrencies recovered as well. Ethereum, the second-largest cryptocurrency, went up 4.4% to a three-week high of $1,704, and a lot of smaller altcoins also went up.
Prior to its imminent transition to a proof-of-stake architecture, Ethereum had significantly outpaced its peers during the previous month. The change, called “the merge,” would mean that the token would stop mining and start staking instead. This would make it use a lot less power and might make it easier to get.
Despite the fact that crypto markets appeared to be improving, investors worried about an imminent reversal of fortune.
On Thursday, Chairman of the Federal Reserve Jerome Powell stated that the bank will continue to tighten monetary policy significantly to battle inflation. Because of what he said, people in the market are expecting the Fed to raise rates by 75 basis points later this month.
Rising interest rates are mostly to blame for crypto’s big losses in 2018. This is because the Fed ended two years of very loose monetary policy.
Since most other major central banks are also raising interest rates, there isn’t much chance that crypto will make a big comeback in the near future.
