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Bitcoin surges to 5-month high, sparking hopes of a comeback

Bitcoin surges to 5-month high, sparking hopes of a comeback
Photo Credit: Pixabay
23 Jan, 2023
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Prices of Bitcoin hit a 5-month high over the weekend, sparking hopes of a resurgence for the crypto industry. The world's most valuable crypto, BTC, hit $23000 briefly over the weekend before plunging by just under 1% to around $22,755.68 at the time of writing. Prices of Ether, the second most valuable cryptocurrency, were also up 1% against Saturday.

After seven days of gains, the Bitcoin price was high enough on January 13 to push the cryptocurrency out of the ‘Fear’ zone, according to market research platform Alternative.me’s tracker. The firm’s Bitcoin Fear and Greed Index is currently pegging Bitcoin as “Neutral”, giving it a score of 50 out of 100.

Experts, however, have pointed out that this may only be a temporary surge, and is likely what market watchers call a “dead cat bounce” — a brief surge during a bear market, which does not necessarily indicate a change in the downtrend.

For instance, in a blog post on January 19, Arthur Hayes, co-founder of crypto investment firm 100x.VC, explained that Bitcoin’s surge may just be because it was already at a low base. He discussed different scenarios that this could lead to, which don’t necessarily mean a resurgence in the sector.

Intraday traders and other investors, too, have said that the price surge may be temporary. Noted crypto intraday trader, Skew, noted on Twitter that the weekend surge was “driven by Asia bid”, while analyst Toni Ghinea tweeted, “the bigger the pump, the harder BTC will fall down.

To be sure, while Bitcoin’s surge may have been a spot of sunshine for the industry, the industry’s concerns are far from over.

On January 20, crypto brokerage Genesis Global Trading (GGT) filed for bankruptcy, adding to the line of large crypto firms that have gone broke recently. GGT is a subsidiary of global crypto conglomerate Digital Currency Group (DCG). GGT joins large names like FTX, Celsius Network and many other crypto ventures that have had to shutter their stores over the past six-odd months.

While the significant price gain has given a ray of hope, it has coincided with the bankruptcy filing of Crypto lender Genesis, the latest victim of the sector contagion induced by the fall of FTX.