Bitcoin Taps $25K After Long Amid Rumors of China Warming Up to Crypto
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Bitcoin has surged by approximately 50% this year alone, reaching $25,000 this week, surpassing its starting point of $16,600 at the beginning of the year. This increase has taken bitcoin back to levels not seen since August last year. Despite fears surrounding the US government’s tough regulatory stance on cryptocurrency, this news has seen bitcoin and other cryptocurrencies grow, adding more than $100 billion to the overall market.
The Price of Bitcoin – An Orthogonal Movement
Despite the surprise surge, reports suggest that neither the news from China nor the US will have a significant impact on bitcoin’s price. A report from the New York Federal Reserve reveals that bitcoin’s reaction to macroeconomic or monetary news will likely be an “orthogonal” movement. The study used a comprehensive intraday dataset to analyze the effects of news on the price of bitcoin. The authors had originally posited that bitcoin was an asset “without intrinsic value” and that its current price depends on the discounted value of its future price.
Surprising Price Recovery
This surprising price recovery has been attributed to reports from China that the country is planning to soften its stance on crypto. The move comes after China launched a major crackdown on the industry in 2021. It goes against the established narrative among several economic experts that bitcoin’s market movements are largely driven by external macroeconomic and monetary news. The report from the New York Federal Reserve suggests that bitcoin is indeed an “orthogonal” movement that reacts independently to other US asset classes.
Despite the ongoing regulatory fears and mixed messages surrounding the global cryptocurrency market, bitcoin’s price continues to increase. This news has been welcomed by many crypto enthusiasts and investors alike, who believe that the long-term future of cryptocurrency remains bright.
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