Growing investors’ optimism about the global economy, central bank monetary tightening, and the Ethereum Merge later this summer caused Bitcoin and other major cryptocurrencies to temper from their Monday rise as Bitcoin reached the $22,800 mark.
Since about mid-June, when cryptocurrency trading platform Celsius Network announced it was stopping withdrawals and Coinbase and a number of digital asset companies revealed they were slashing employment, Bitcoin has been hovering around the $18K to $22K level.
The leading altcoin, Ether, performed even better, rising recently by more than 19% from the day before to trade at almost $1.6K.
The Ethereum blockchain’s Merge transition from a more energy-intensive proof-of-work protocol to a more environmentally friendly proof-of-stake protocol is still being closely watched by markets. However, given the ongoing months-long backdrop of rising prices, central bank uncertainty, and the imminent risk of recession, market experts were cautious of sounding overly optimistic.
The dollar remained Tuesday slightly above a one-week low against key peers as markets lowered the likelihood of a percentage-point Federal Reserve rate hike this month, sending cryptocurrency investors into risk-on mode.
Bets on a supersized easing program surged last week when statistics showed that U.S. inflation, which was already at a four-decade high, continued to rise in June.
However, other Federal Reserve officials quickly shot down such claims, and data released on Friday showed that consumer inflation expectations had fallen to their lowest level in 12 months.
Crypto investors remain uneasy when court documents showed that Celsius had a $1.2 billion hole (at a minimum) in its balance sheet. The company has $5.5 billion in liabilities, of which $4.7 billion are client holdings, and just $4.3 billion in assets, most of which are highly illiquid.