Bitcoin, ethereum and other major cryptocurrencies have rocketed higher this week, adding $100 billion to the combined crypto market that some think is going “parabolic.”
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The bitcoin price has topped $25,000 per bitcoin for the first time since last summer as traders bet the Federal Reserve could make a dramatic u-turn and despite fears of a growing U.S. war on crypto.
Now, data has revealed this week’s $100 billion bitcoin, ethereum and crypto price boom could have been triggered by institutional investors pouring over $1.5 billion into the crypto market.
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“We found that several funds/institutions poured nearly $1.6 billion into the crypto market since Feb 10,” bitcoin and crypto data analysts at Lookonchain posted to Twitter, linking to several “mysterious” addresses and outlining how the Circle-issued USDC stablecoin was used to send funds to various exchanges.
USDC is the world’s second-largest stablecoin with a total market capitalization of almost $42 billion. TetherUSDT, the biggest stablecoin, has a total value of just over $70 billion.
The bitcoin and crypto market dipped under $1 trillion this week following news of regulatory action against another major stablecoin, BUSDBUSD—a $13 billion Binance-branded, dollar-pegged stablecoin issued by Paxos.
BUSD has seen almost $3 billion of redemptions this week as traders cash out of the stablecoin. Binance chief executive said via Twitter he expected the number of BUSD in circulation to fall further after Paxos was ordered to stop issuing it.
New York’s top financial regulator was tipped off to data suggesting Binance did not have enough reserves to back BUSD by Circle, it was reported by Bloomberg, escalating the battle between stablecoin issuers as they fight for dominance of the market.
Meanwhile, the latest U.S. inflation showed consumer prices continued to cool in January, rising at an annual rate of 6.4% and fueling hopes the Fed could declare victory in its war against soaring inflation later this year.
“As we have been saying for three months now, the U.S. inflation data will likely come down further and unsurprisingly, we had a strong rally,” Markus Thielen, head of research at Matrixport, wrote in an emailed note.
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However, some long-term bitcoin price watchers are reticent to call the end of the recent bear market, known as crypto winter, and the beginning of a bitcoin and crypto price spring.
“Bitcoin’s price has trended strongly upward since the beginning of the year, but those who have been in the crypto space for multiple cycles are loath to call any rally the start of a bull market,” Alex Adelman, the chief executive at bitcoin rewards app Lolli, said via email.
“While bitcoin’s current surge in price and trading volume indicates increased market confidence, ongoing price trends will still be guided by regulation, inflation, and other crypto industry developments. While the crypto markets have started the year on a high note, the collapse of FTX weakened many companies and people in the crypto space, and there may well be more casualties from the fallout.”
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