After falling to its lowest level since mid-June at the beginning of the week, Bitcoin has started to recover again. Ethereum (ETH) also rose by around 4%, while the total value of the cryptocurrency market rose to over $1 trillion again. The dollar index (DXY) fell nearly 1% on Friday morning. US stock indices closed higher on Thursday. Due to the high correlation, Bitcoin tends to track stock prices. BTC tends to rise when the dollar weakens.
Bitcoin has been trading around $18,000 to $24,000 since June. BTC has not been able to break through this price range. Vijay Ayyar, vice president of corporate development and international at crypto exchange Luno, said that as a result of Friday's rally, Bitcoin could test a level between $22,500 and $23,000.
According to the manager, if Bitcoin fails to surpass the $23.00 level, it may again enter a vicious circle and fall below $20,000. Bitcoin has disappointed its investors this year. As the uncertainty in the global economy deepens, the Federal Reserve's hawkish stance and interest rate hikes have hit the cryptocurrency market. Bitcoin has dropped more than 60% from the record level seen in November. The cryptocurrency market has also been affected by failed projects and companies that have filed for bankruptcy in the industry.
While the cryptocurrency market is having a hard winter, investors and the industry are counting the days for the Merge update, which will make the Ethereum ecosystem more efficient and functional. Merge is expected to be completed by mid-September. When the first announcements regarding the Merge history were made, Ethereum caused great excitement by outperforming Bitcoin.
Markets are hoping for inflation to come down when the US Consumer Price Index is released next week. In addition, investors are following the signals of the Fed's rate hike. On Thursday, Fed Chairman Jerome Powell said he was "strongly committed" to fighting inflation and suggested that more rate hikes could come.
Yuya Hasegawa, principal analyst at Japanese cryptocurrency exchange Bitbank, said that in anticipation of lower inflation and the Ethereum Merge update, Bitcoin could test the $22,000 level, but also issued a warning. “Too much optimism can be dangerous, given what some Fed members, including Chairman Powell, have said this week,” Hasegawa wrote in a note on Friday.