Bitcoin Soars Over $22K to Reach Four-Month High

Bitcoin saw a significant increase of over 5%, reaching a four-month high of over $22,000. The market is now closely monitoring any statements from the Federal Reserve. 

Bitcoin Soars Over $22K to Reach Four-Month High

Bitcoin has reached its highest level since September, soaring past $22,000 as the broader cryptocurrency market continues its unexpected rally in 2023. The leading cryptocurrency by market capitalization was recently trading as high as $22,387, an increase of 5.4% in the past 24 hours, despite the recent bankruptcy filing of Genesis Global Holdco LLC, the holding company of troubled cryptocurrency lender Genesis Global Capital. Investors had already priced in the company's looming problems, which were a result of the collapses of crypto hedge fund Three Arrows Capital and crypto exchange giant FTX. 

Ether, the second largest cryptocurrency by market capitalization, also saw a similar increase, rising 5.2% to $1,640. The CoinDesk Market Index (CMI) was up 4.1%. Bitcoin has climbed 11% in the past seven days and is up 34% for the year. Ether has jumped 12% over the past week and is up 37% since December 31. 

The rally in the crypto market also positively impacted crypto-related stocks, with exchange Coinbase rising 10% and bitcoin miner Marathon Digital Holdings surging 9%. Traditional markets also saw a slight increase, with the S&P 500 index up 1.9%. 

Investors are closely monitoring the Federal Reserve's next statements as the recent larger-than-expected decline in the producer price index (PPI) indicates that the Fed's monetary hawkishness has been taming inflation. The CME FedWatch tool currently shows that traders see a 97% chance that the Federal Open Market Committee (FOMC) will raise rates by just 25 basis points (0.25 percentage point) at its next meeting in February, slowing down from the 50 basis-point hikes in the December meeting. 

However, experts warn that post-rally euphoria should be treated with caution, and the Fed's handling of monetary policy while balancing economic data and recession fears will have a major impact on the market overall.