While 2022 ended on a grim note with macro headwinds providing little hope of a revival in 2023, the start of a new year has surprised bears with a surge in Bitcoin (BTC), Ether (ETH) and altcoin prices. The period of sparse volatility in the crypto market appears to be ending with a breakout to the upside.
The increase has been particularly striking in some altcoins such as Lido (LIDO), Solana (SOL), and Cardano (ADA). The primary factors promoting the spike in these coins are the upcoming Ethereum Shanghai update (for LIDO) and the negative funding rate in the futures market, especially for SOL. The negative rates implies that most traders are holding short positions, giving an opportunity for whale buyers to run their stop losses. Funding rates for some other tokens remain exposed to a short squeeze.
Moreover, the new year has also seen the re-emergence of the degen gambling that had taken a back seat after the collapse of FTX in November. A memecoin price surge is evidence of the residual degen spirit. Technically, the total market capitalization of altcoins has surpassed a key technical resistance level as bullish momentum builds.
While the sustainability of the bull run is questionable due to the broader trend remaining bearish, the fledgling uptrend could still bring some pain for late sellers. The five primary factors influencing altcoin prices are:
Job market data revives the hope of a soft landing
Defying Dow Jones estimates for an additional 200,000 nonfarm payrolls added in December and market expectations of a slowdown, the labor market report showed tha230,000 were added, a 0.2% increase in employment.
A strong jobs market goes against the prevalent recession claims and acts as a catalyst for a risk-on rally. The Consumer Price Index (CPI) reading for December coming out on Jan. 12 will be instrumental in either building on the newfound bullish sentiment or returning to negative sentiments.
If inflation continued its downtrend, with December’s CPI print below 7.7%, then the market’s confidence in a soft landing could increase. However, if inflation rose in December, then the chances of a higher…
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