Bitcoin on track to end best January performance since 2013
With a gain of 39.4% this month, Bitcoin ends its best month since a 40% rally in October 2021 and its best January since 2013.
Bitcoin (BTC-USD) is currently trading at $22,910, trading for the past week at its highest level since last August. The biggest cryptocurrency hasn’t given holders such an uplifting January in a decade.
“We started January with some explosive price action the week of December’s CPI push,” said Christopher Newhouse, options trader at crypto market maker GSR.
From Newhouse’s perspective, buy-side demand from institutional clients—whether macro-driven traders or hedge funds—returned in the first two weeks of the month, triggering initial short-seller liquidations.
In the 12 days following December’s inflation report released on Jan. 12, $1.3 billion worth of bitcoin short positions were liquidated, or $611 million net of long positions, according to crypto derivatives aggregator CoinGlass. Over the past week, the trend has reversed with $331 million in long positions liquidated, or $108 million net of short positions.
Between January 10 and 20, which is when bitcoin saw its biggest moves higher, speculative momentum traders returned to the market, spearheading bitcoin breaking out of a range between $15,700 and $18,000.
“Bitcoin’s push above $20,000 and $22,000 both occurred on Fridays when traders had large amounts of negative gamma exposure and forced to hedge towards the end of US hours trading,” Newhouse observed.
Analysts say the next leg for bitcoin is likely to be decided in the days following the Federal Reserve’s monthly rate hike decision.
“This market is going to start trading very technically,” Edward Moya, senior analyst at Oanda told Yahoo Finance, “Volatility is coming back.”
The returns on bitcoin purchases look like what happened from July to early August, according to Michael Safai, co-founder and partner at crypto trading firm Dexterity Capital.
“It takes about two months or so for the crypto market to stabilize after a big shock, and we’re at that point after FTX,” Safai said over email.
“The worst damage is done, investors are relatively confident that there are no more shoes to drop, as reflected in the muted reception of the Genesis bankruptcy, and risk appetite is slowly returning.”
Year-to-date, the total market cap for cryptocurrencies is up 24% to $1.05 trillion, according to Coinmarketcap. Across spot exchanges worldwide, global crypto volume has risen to $5.5 trillion, up 61% since the start of the year, according to crypto indexing platform Nomics.
Data collected by blockchain analytics platform Glassnode finds that since bitcoin regained a price above $21,000, the current market rally has pushed buyers of the largest cryptocurrency from 2019 and earlier back above breakeven.
“These psychological levels matter,” Moya added.
Click here for the latest crypto news, updates, values, prices and more related to Bitcoin, Ethereum, Dogecoin, DeFi and NFTs
Read the latest financial and business news from Yahoo Finance
Download the Yahoo Finance app for apple or Android
Follow Yahoo Finance on Twitter, Facebook, Instagram, Flip board, LinkedInand YouTube
