SINGAPORE – Smaller coins led gains among cryptocurrencies on Thursday on the back of investor optimism that central banks in the United States and Europe will finally ease their aggressive interest rate hiking.
Altcoins, including Ether and Cardano, were climbing north of 2 per cent in New York trading on Thursday, while Bitcoin pared back its strong advance. Still, the largest token by market value rose as much as 2.4 per cent on Thursday before moderating its gains to trade at US$23,786. A gauge of the top 100 coins is up 37 per cent so far in 2023.
Investors are “moving out the risk spectrum towards more speculative plays right now”, Mr Matt Maley, chief market strategist at Miller Tabak + Co, said. “Just like they are in stocks.”
Crypto-linked equities are also benefiting from the broad-based enthusiasm. Coinbase Global was up 19 per cent, while Silvergate Capital was higher by 36 per cent. Meanwhile, an index of crypto-mining equities was also trading higher by 10.7 per cent on Thursday, after registering an unprecedented month when it saw 77 per cent of gains.
Bitcoin has been trading in a tight range these past two weeks, despite it reaching a five-month high on Wednesday. This comes after comments from Federal Reserve chair Jerome Powell that signalled less harsh monetary policy ahead. Still, the price of the token is a far cry from its record of almost US$69,000 on November 2021.
“The sideways action after such a big move is constructive,” Mr Frank Cappelleri, founder of CappThesis, said. “Bitcoin’s spike in January was much more pronounced than anything we saw from equities, and simply continuing to consolidate those gains would be bullish.”
It has been a promising start to the year for Bitcoin, which in 2022 fell 64 per cent in its second-worst annual performance on record. The rally has renewed previously dampened enthusiasm, even as the industry is still grappling with one of its darkest stretches yet amid the fallout of the FTX empire and other crypto firms.
However, the coin’s rally is more muted than that of other speculative assets. Star fund manager Cathie Wood’s flagship fund, ARK Innovation exchange-traded fund, for instance, closed on Wednesday above its 200-day moving average for the first time since November 2021. Shares are up 7.7 per cent on Thursday.
Mr Peter Tchir, head of macro strategy at Academy Securities, said he was “surprised Bitcoin is not up more”.
“I am even less sure than usual what is holding it back,” he added. BLOOMBERG
