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With a 39.4% gain this month, Bitcoin closes its best month since a 40% rally in October 2021 and its best January since 2013.
Currently changing hands at $22,910, bitcoin (BTC-USD) traded last week at its highest level since August last year. The biggest cryptocurrency hasn’t given holders such an uplifting January in a decade.
We started January with 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-focused traders or hedge funds, returned in the first two weeks of the month, triggering the initial sell-offs. short sellers.
In the 12 days following the December inflation report published on Jan. 12, $1.3 billion in bitcoin short positions were liquidated, or $611 million net of long positions, according to the derivatives aggregator. CoinGlass cryptographics. 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 January 20, when bitcoin saw its biggest gains, momentum traders driven by speculation returned to the market, pushing bitcoin out of a range between $15,700 and $18,000. .
“Bitcoins above $20,000 and $22,000 both happened on Friday as dealers had large amounts of negative exposure and selling towards the end of US trading hours,” Newhouse observed. .
Analysts say the next step for bitcoin will likely be determined within days of the Federal Reserve’s monthly rate hike decision.
This market is going to start to get very technical, Edward Moya, senior analyst at Oanda told Yahoo Finance, “volatility is coming back.”
The return of bitcoin buying resembles what happened from July to early August according to Michael Safai, co-founder and partner of crypto trading firm, Dexterity Capital.
The story continues
“It takes about two months for the crypto market to stabilize after a major shock, and that was when after FTX,” Safai said via email.
“The worst of the damage has been inflicted, investors are relatively confident that there are no more shoes to drop, as evidenced by the muted reception of Genesis’ bankruptcy, and risk appetite is kicking in.” to come back slowly.”
NEW YORK, USA – JANUARY 03: Sam Bankman-Fried leaves court in New York City on January 03, 2023. (Photo by Fatih Aktas/Anadolu Agency via Getty Images)
Year-to-date, the total cryptocurrency market capitalization has increased by 24% to $1.05 trillion, according to Coinmarketcap. On spot exchanges around the world, global crypto volume has risen to $5.5 trillion, a year-to-date increase of 61%, according to crypto indexing platform Nomics.
Data collected by blockchain analytics platform Glassnode finds since bitcoin regained a price above $21,000, the current market rally has pushed buyers of the biggest cryptocurrency of 2019 and earlier above the break-even point.
“These psychological levels are important,” added Moya.
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