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Bitcoin price surges 24% as crypto retakes $1tn market cap

Bitcoin to the moon, bullish cryptocurrency BTC. Bitcoin crypto currency golden logo in a rocket with copy space background in 3D rendering. Blockchain technology concept.
Only one week ago bitcoin was still hovering around the $17,000 mark. Photo: Getty

Bitcoin (BTC-USD) broke through the $21,000 mark in early Monday trading, a considerable price movement from a low of $16,000 at the beginning of the year.

The world's largest digital asset by market capitalisation surged almost 25% in a week to $21,069. Only one week ago bitcoin was still hovering around the $17,000 mark.

The price hike was echoed by other cryptocurrencies, with ethereum (ETH-USD) up 20% in a week to $1,564, hitting a two month high over the weekend.

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Solana (SOL-USD) made the biggest gains with a 62% rise in the week, to $23.31.

On Monday, the cryptocurrency market capitalisation stood at $1.02tn (£980bn), a rise of around 1.2% in 24 hours, according to data from Coingecko.

The capital inflow into the cryptocurrency sector comes amid renewed investor confidence that the US Federal Reserve is taming inflation without casting the economy into recession.

Successive rate hikes by the central bank led to fears that the drying up of liquidity would result in a stagnated economy and a retraction of economic output.

But there have been recent signs of a reversal, with consumer prices in the US rising by only 6.5% in December, compared to a year before.

The rate of inflation fell in the last six months of 2022, since reaching a peak of 9.1% in June.

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The crypto market is hoping for less hawkish monetary policy from the Fed in coming months, with the potential for a reduction in hikes and the end of the reduction in money supply.

However, despite the slowdown in price increases, inflation continues to hover near a 40-year high and the World Bank remains pessimistic about the consequences of successive monetary policy tightening around the world.

In a report released last week, the World Bank said: "Although this tightening has been necessary for price stability, it has contributed to a significant worsening of global financial conditions, which is exerting a substantial drag on activity."