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With a 39.4% gain this month, Bitcoin is closing out its best month since a 40% rally in October 2021 and its best January since 2013.
Currently changing hands at $22,910, bitcoin (USD-BTC) has been trading for the past week at its highest level since August of last year. The largest cryptocurrency hasn’t given headlines such an encouraging January in a decade.
“We kicked off January with some explosive price action the week of the December CPI print,” said Christopher Newhouse, options trader at crypto market maker GSR.
From Newhouse’s perspective, buy-side demand from institutional takers, whether macro-driven traders or hedge funds, returned in the first two weeks of the month, prompting initial liquidations from short sellers. .
In the 12 days after December inflation report Posted on Jan. 12, $1.3 billion of short bitcoin positions were liquidated, or $611 million net of long positions, according to the crypto derivatives aggregator. glass coin. Over the past week, the trend has reversed with $331 million of long positions liquidated, or $108 million of net short positions.
Between January 10 and 20, which is when Bitcoin experienced its biggest moves higher, speculation-driven traders returned to the market, spearheading Bitcoin’s breakout from a range between $15,700 and $18,000.
“Bitcoin’s rallies above $20,000 and $22,000 occurred on Fridays, as traders had large amounts of negative exposure and selling towards the end of US business hours,” Newhouse observed.
Analysts say bitcoin’s next stage will likely be determined in the days after the Federal Reserve’s monthly rate hike decision.
“This market will start trading very technically,” Edward Moya, a senior analyst at Oanda, told Yahoo Finance, “volatility is coming back.”
The bitcoin buying return is similar to what happened from July through early August, according to Michael Safai, co-founder and partner at crypto trading firm Dexterity Capital.
“It takes about two months for the cryptocurrency market to stabilize after a big shock, and we are at that point after FTX,” Safai said via email.
“The worst of the damage has already been inflicted, investors are relatively confident there are no more shoes to drop, as reflected in the weak reception of the Genesis bankruptcy, and risk appetite is slowly starting to return.”
So far this year, the total cryptocurrency market capitalization has risen 24% to $1.05 trillion, according to Coinmarketcap. Across spot exchanges around the world, global cryptocurrency volume has risen to $5.5 trillion, an increase of 61% since the beginning of the year, according to the cryptocurrency indexing platform. nomic.
Data collected by the blockchain analytics platform glass node finds that since bitcoin regained a price above $21,000, the current market rally has pushed buyers of the largest cryptocurrency of 2019 and before back above breakeven.
“These psychological levels matter,” Moya added.
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