close up view of a golden coin

Bitcoin Surges Past $23,000 as US Economic Data Came in Strong

Bitcoin, the world’s largest cryptocurrency, hit a new all-time high of $23,000 on Tuesday (Jan 26) before gradually declining in line with Wall Street’s rally. The decline in Bitcoin’s price came in response to strong economic data from the United States, which showed that the US economy is recovering.

On Wednesday (Jan 27), the price of Bitcoin dropped 1.13% to $22,918.90. Despite the decline, the cryptocurrency still outperformed the US economy and the stock market.

Sources: https://coinmarketcap.com/currencies/bitcoin/

The Dow Jones Industrial Average, an index that tracks the performance of 30 major companies listed on the New York Stock Exchange, soared more than 100 points as investors eased fears of a recession in the United States. The strong economic data, including Gross Domestic Product (GDP) figures and higher-than-expected orders for durable goods, helped boost investor sentiment.

Bitcoin’s surge in price was also driven by expectations that the US Federal Reserve (Fed) is likely to slow down on raising interest rates or may even cut interest rates at the earliest this year. The Fed’s decision is based on the slowing inflation rate in the US economy.

In addition, Bitcoin also received positive factors from the halving phenomenon, which experts expect to occur during March-May 2024. The halving phenomenon is a programmed event that occurs every four years and reduces the number of bitcoins mined per block by half. This event is expected to have a positive impact on the cryptocurrency’s price.

Bitcoin reached its previous all-time high of $69,000 in November 2021. However, it then sank below $20,000 in June 2022 amid concerns that the Fed’s acceleration in raising interest rates and shrinking its balance sheet would drag down liquidity in the market and lead to a recession in the United States. Despite the recent decline, Bitcoin is still outpacing the US economy and the stock market.

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