Bitcoin’s biggest weekly increase since July, according to CoinShares

After a bumper month forBitcoin, big investors are trying to dip their toes into the waters again.

Inflows of more than $117 million were seen last week, the biggest weekly increase since July, according to data from asset manager CoinShares.

The biggest draw was that of Bitcoins, with funds tracking it responsible for $116 million of that. The total assets under management of cryptocurrencies rose to $28 billion, up 43% from lows in November as the collapse of the FTX exchange sent shockwaves through the industry.

Joseph Edwards, investment adviser at Enigma Securities, said that people are more confident than they were a month ago.

In January, the original criptocurrency has soared by 40%, closing in on its best month since October 2021 and its second-best January in the past 10 years.

The rally, combined with a possibly brighter macro picture, has some investors hoping that the long crypto winter might finally be over by the end of the year. Many investors believe that the U.S. Federal ReserveFederal Reserve will hike its benchmark rates by 0.25% this week - the smallest rise since their tightening cycle began last year.

If peak inflation is behind us for now, long-term interest rates may move lower as we approach the end of the inflation-focused rate-hiking cycle, according to analysts at Fidelity Digital Assets.

This could signal positive momentum on the macro front for assets such asBitcoin. The markets activity in the options market indicates that traders are rushing to place bets just after the Fed meet, a sign of the importance the market is placing on it, according to B2 C 2 of the market.

According to CoinShares, the average weekly volume is up 11%, suggesting traders are returning to normal after months of dampened activity.

The Fed could still spoil the party if they take a more hawkish tone this week, because it's not out of the woods by a long stretch.

Coinglass's Fear Greed index - where 0 indicates extreme fear and 100 extreme greed - is hovering at 61, the highest level since mid-November 2021, just after it began retreating from its peak.

We might see a drop off next week or two, how deep that drop goes is questionable, Edwards said.

According to analysts, there are also other signs that the end of the bear market might be nigh, according to Bitfinex. They said that short-term investors were selling their bitcoin at a profit, while longer-term HODlers were still sticking with their coin and not contributing to selling pressure.

In January 2023, the realised profit and loss for the entire market was recorded as positive, for the first time since April 2022, a continuation of this trend would signal the final stages of a bear market, they said.

The dominance of the total market for cryptocurrencies has hovered around 41% this month, levels not seen since July of last year. In April of 2019, analysts at Citi said this mimicked a jump in the dominance of digital currency when a rally in bitcoins marked a bottom of the market.

Other market watchers said that stocks, another relatively risky asset class, would likely drive bitcoin prices in the next week, particularly the performance of interest rate-sensitive tech stocks.

The correlation between the two is 0.94, the highest level since May 2022, where a measure of 1 indicates that the two are moving in lock-step.

In November,Bitcoin broke its bonds with stocks and traded with a negative correlation of 0.7.

Rachel Lin, CEO of Synfutures, said that it's possible thatBitcoin could reach the next resistance level of $25,200 in the coming weeks. If the price ofBitcoin goes up again, there is a good chance it will reach a higher low on the larger timeframe.