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bitcoin It rose to its highest in nearly a month on Thursday as traders bet on slowing U.S. inflation and digested news that lawyers for cryptocurrency exchange FTX had found billions of dollars in assets.
The world’s largest cryptocurrency jumped above $18,000 for the first time since December 14, increasing its value by about 4% in the past 24 hours. Bitcoin was last traded at $18,232.36, according to CoinMetrics.
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US inflation data released on Thursday showed a modest decline. The Consumer Price Index fell 0.1% in December on a monthly basis, in line with Dow Jones estimates.
However, prices continued to rise by 6.5% year-on-year. This was down from a rise of 7.1% in November and far from the peak rate of 9.1% in June. Investors hope that the downturn will put pressure on the US Federal Reserve to reverse the interest rate increases.
The Fed and other central banks have raised interest rates over the past year or so in an effort to tame spiraling inflation, in moves that have pushed stocks and cryptocurrencies sharply lower in 2022.
The hope now is that the US central bank will cut interest rates, taking some of the pressure off risky assets.
Elsewhere, lawyers for collapsing cryptocurrency exchange FTX said Wednesday that they have found about $5 billion in “liquid” assets, including cash and digital assets. The recovery will be a welcome boon for FTX clients after the cryptocurrency exchange crash in November.
However, FTX lawyers cautioned that the $5 billion cache was so high that selling the assets could create significant negative pressure on the market, driving down its value.
Bitcoin is down about 74% from its November 2021 high of $68,990. Last year, nearly $1.4 trillion was wiped out of the cryptocurrency market, as traders dumped risky assets such as technology and growth stocks.
Bitcoin and the broader cryptocurrency market also fell, indicating an increase in correlation with major stock benchmarks such as the Nasdaq Composite.
This decline was also caused by crypto-specific issues, including the collapse of projects and companies such as FTX and Terra.
However, Bitcoin has started 2023 on a positive note, as its price has been rising steadily over the past 12 days.
“Bitcoin has been on a downtrend for over a year now, which is a record period for a cryptocurrency bear market,” Vijay Aiyar, vice president of corporate and international development at cryptocurrency exchange Luno, told CNBC in emailed comments Thursday morning.
“We’ve had a lot of negative events over the past year, and if one looks at the price reaction to those, it’s generally going lower and lower – a sign that the market is accepting the news well, the selling pressure is being absorbed, and then we move on to accumulation stage.
“This could also mean that the market believes the worst is over for cryptocurrencies and most of the negative news is now priced in.”
Other altcoins supported Bitcoin’s price rally 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 earlier set aside $1 billion in a fund aimed at propping up the industry after the FTX collapse, has itself been plagued by concerns about the safety of its reserves. The auditor working on the company’s so-called Proof of Reserves, Mazars, suspended all of its work with crypto firms in December.
Binance says it has more than enough assets to cover the liabilities.