Bitcoin has stormed out from January’s beginning gates with a rise of more than 26%. This is putting the heat on bears, who expected more risks after sharp selloffs for 2022.
This month’s token advance is the largest for the first month of the year since a 31% rally in 2020, before the pandemic. This surge has contributed to a rise in digital assets’ overall value above $1 trillion. That level was reached before the collapse of the FTX exchange in November, CoinGecko data indicates.
The biggest cryptocurrency rose by as much as 2.5% Monday, and was trading at $20.860 as of Tuesday, 12:18 p.m. London time. This is slightly lower than the session, along with tokens such as Ether, Avalanche, and Algorand.
Partly, the crypto climb is a wager on the end of punishing interest rate hikes. This prospect has also helped stocks, bonds, and gold. Investors are still questioning if these assets have moved too fast, considering central banks such as the Federal Reserve promise to raise policy rates until high inflation is eliminated.
Although there is still uncertainty about digital assets, including whether an immediate squeeze is driving up prices or will end, Noelle Acheson stated that FOMO “is likely to play a part in how the market evolves from now.” She used the acronym FOMO for fear of missing out.
Researcher Kaiko stated on Twitter that a rise in average trade size indicates that ‘whales are driving the rally’. Kaiko was referring to large crypto owners. Kaiko stated that trade sizes have increased from $700 to $1,100 for the Bitcoin-US Dollar pair on Binance since Jan. 8.
Kaiko reports that market depth – a measure how one large trade can impact the price Bitcoin – is still at its lowest point since FTX went bankrupt.
The bankruptcy of FTX, as well as the fraud charges brought against Sam Bankman-Fried, continue to put pressure on the crypto industry. The parent company Digital Currency Group and Crypto Broker Genesis are working together to solve their debt problems. This could lead to market turmoil.
Some technical indicators indicate that Bitcoin’s leap is being stretched. The token’s 14 day relative strength index, which measures momentum, has reached 90. This is a significant increase from the 70 level, which was deemed ‘overbought’. It also marks the highest level in the past two years.
The Bitcoin boom this year is one of the indicators that “there’s still quite a bit of froth in market” and that “investors continue ‘act’ in much more bearish ways than they’speak,” Matt Maley (chief market strategist at Miller Tabak + Co.) wrote in a note on Sunday.
Bitcoin and a gauge of top 100 digital assets fell more than 60% in 2022. This was a difficult year that raised questions about their future.