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Following Bitcoin’s seeming resurgence in the past 48 hours, crypto stocks are also picking up the pace.
Despite the general bearish sentiment, there seems to be a plot twist playing out in the stock market. Recent market performance shows S&P 500 and NASDAQ stocks sliding behind crypto-related stocks such as Coinbase (COIN) and Hut 8 (HUT). NASDAQ went down by a small extent, while S&P 500 dipped by 0.2%. However, the reverse was the case for stocks related to crypto and digital asset companies as Bitcoin (BTC) traded above $19,000.
Coinbase (COIN) gained almost 5%, while Hut 8 (HUT) rose by 9%. Silvergate (SI), MicroStrategy (MSTR), and Marathon Digital (MARA) grew by 3%, 4.8%, and 14% respectively. Furthermore, the market cap of the top 10 largest cryptocurrencies increased by 10 – 20% in the last 7 days. CEO of FRNT Financial, Stephane Ouellette described this performance as surprising and attributed the price movement to the short interests of equities. At writing, BTC closes towards the $20k mark, trading upwards of $19,900.
December CPI Report and the Crypto Market
Recently, the US Bureau of Labor Statistics released the Consumer Price Index (CPI) report for December. The report placed the index at 6.5%, a significant decrease from November’s 7.10%. This number indicates a decline in the average price of goods and a decline in inflation.
The crypto market has reacted positively to the report with Bitcoin and Ethereum rising by 5% and 4.61% respectively within 24 hours after the report’s release. The market’s positive reaction is not unexpected since a decrease in inflation means that crypto investors can save more on daily expenditures and thus make more long-term investments.
The Start Of a Bull Run?
Crypto investors are excited about the positive price movement after months of market downturn. However, many experts question if this is the beginning of a bull market as several top crypto companies are under intense scrutiny. For example, the SEC recently sued Genesis and Gemini over their crypto lending programs. Gemini had allowed its customers to loan their crypto assets to Genesis in exchange for high interest. However, Genesis, in November, announced that it would not be able to pay investors. The crypto lending subsidiary of Digital Currency Group (DCG) stated insufficient liquidity due to market turmoil as the reason for the default.
Also, a few weeks ago, there are speculations surrounding Huobi and other lending firms. So while celebrating a positive market outlook is valid, crypto investors are trading with bated breath until they know the fate of these crypto companies.
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