The cryptocurrency market ended Friday's trading session on a high note after a rough week in which more than $300bn (£219.33bn) wiped out its entire market cap.
Investor sentiment remained fearful after last week's US Federal Open Market Committee (FOMC) meeting, in which the central bank discussed reducing its $8.3 trillion balance sheet.
Meanwhile, Federal Reserve Chairman Jerome Powell told US federal lawmakers during a hearing this week on Tuesday that the bank is prepared to raise interest rates multiple times to control inflation.
Bitcoin ended the week up more than 3% at $43,276 per coin. Other popular assets like cardano and polkadot outperformed bitcoin.
Cardano saw a gain of more than 4% on the week and finished at $1.28 per coin, while Polkadot saw a gain of more than 6% to $27.22.
FOMC meeting
Even though the FOMC meeting took place over a week ago, it still dominated this week's trading session.
The threat of rising interest rates often reduces investors' confidence in risky assets like cryptocurrencies and digital tokens. This caused the market to sell off by more than 10% over the weekend, with bitcoin trading close to $40,000 on Monday morning.
This threat also weighed on technology and growth stocks on the New York Stock Exchange, as the Nasdaq Composite Index fell more than 3% since its close on Tuesday.
geopolitical problems
Outside of the US, geopolitical issues helped drag the market lower.
Kazakhstan's government has been dealing with unrest over its decision to lift state-imposed price caps on imported oil, which nearly doubled energy prices in the country overnight.
In response, the government shut down the country's internet, causing the country's cryptocurrency miners to suffer. Before the riots, Kazakhstan accounted for more than 18% of the global crypto mining market.
Elsewhere in Eastern Europe, Kosovo announced a countrywide ban on cryptocurrency mining.
However, publicly traded mining stocks such as Riot Blockchain, Hut8 and Marathon Digital Holdings were unaffected by the headlines.
Riot Blockchain ended the week up more than 7% to $20.68, while Hut8 and Marathon Digital gained 6.6% each.
Long-term holders win
One reason Delphi Digital analysts Genevieve Yeoh and Joo Kian are optimistic about next week's market is persistent inflation in the US.
According to the latest figures from the Bureau of Labor Statistics, inflation rose an annualized 7% in December, the highest rate in more than four decades.
Meanwhile, the dollar index slumped to a two-month low, sparking a "modest relief rally," analysts said.
Looking ahead to the week ahead, analysts expect cryptocurrency prices to continue their uptrend after long-term holders bought the week's dip.
“On-chain data shows that during the January price crash, long-term holders accumulated bitcoin after months of dumping bitcoin late last year,” the duo wrote in a note to investors. “An increase in long-term headline accumulation could be a positive indicator for bitcoin price.”
Read more: What's next after the recent bitcoin price crash?
The difference between trading assets and CFDs
The main difference between trading CFDs and trading assets such as commodities and shares is that you do not own the underlying asset when you trade CFDs.
You can still profit if the market moves in your favor, or lose if it moves against you. However, with traditional trading you enter into a contract to exchange legal ownership of individual shares or commodities for money, and you own them until you sell it back.
CFDs are leveraged products, which means that you only need to deposit a percentage of the total value of the CFD trade to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy shares, for example.
CFDs attract overnight costs to hold trades (unless you use 1-1 leverage), making them more suitable for short-term trading opportunities. Stocks and commodities are typically bought and held longer. You may also pay a commission or broker fees when buying and selling assets outright and would need a place to store them safely.
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