With a gain of 39.4% this month,Bitcoin is closing out its best month since October 2021 with a 40% rally in October 2021 and its best January since 2013.
Since August of last year, the price ofBTCUSD has been trading at $22,910, the highest level since August of last year. The largest criptocurrency hasn't given holders such an uplifting January in a decade.
Christopher Newhouse, options trader with GSR, said we started January off with some explosive price action the week of December's CPI print.
In the first two weeks of the month, buyer side demand from institutional takers, whether macro driven traders or hedge funds, sparked initial short seller liquidations, according to Newhouse's perspective.
According to CoinGlass, $1.3 billion worth of short positions onBitcoin was liquidated in the 12 days following December's inflation report released on January 12, or $611 million as net of long positions. 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 when bitcoin saw its largest moves higher, speculation-driven momentum traders returned to the market, spearheading bitcoins breaking out of a range of between $15,700 and $18,000.
Newhouse observed that Bitcoins pushed above $20,000 and $22,000 on Fridays as dealers had large amounts of negative exposure and selling toward the end of U.S. hours trading.
The next leg of digital currency will likely be determined within the days following the Federal Reserve's monthly rate hike decision.
Edward Moya, a senior analyst at Oanda, told Yahoo Finance that the market is going to start to trade very technical. Michael Safai, co-founder and partner with Dexterity Capital, said the return of bitcoin buying looks similar to what happened in July through early August.
After a major shock, it takes about two months or so for the market to stabilize, and we are at that point post-FTX, said Safai over email.
The worst of the damage has been inflicted, investors are relatively confident that there are no more shoes to drop and risk appetite is starting to slowly return, as reflected in the muted reception to the Genesis bankruptcy. According to Coinmarketcap, the total market value for cryptocurrencies is up 24% to $1.05 trillion year to date. Global criptocurrency volume has gone up 61% since the beginning of the year, according to the Nomics platform.
Since bitcoins regained a price above $21,000, the market rally has pushed buyers of the largest cryptocurrencies from 2019 and above breakeven, according to data collected by Glassnode.