The COVID-19 pandemic, which wreaked havoc on global economies and financial markets, profoundly impacted Bitcoin in 2020. Initially, the crypto experienced a sharp decline alongside traditional markets in the midst of panic-induced selling. However, Bitcoin’s resilience shone through as it rebounded swiftly, attracting a new wave of investors seeking a hedge against traditional economic uncertainties.
Fast forward to the present, and Bitcoin is once again on a remarkable upswing, reminiscent of the pandemic-induced rally. The factors influencing this surge are multifaceted, ranging from macroeconomic trends to institutional interest and regulatory developments.
Bitcoin’s epic comeback sparks memories of pandemic surge
Bitcoin is poised to advance for a fifth consecutive month, marking the longest winning run for the token since a rally fueled by easy money during the pandemic era.
The largest digital asset increased by approximately 2% in January, a month of significant fluctuations triggered by the introduction of the first US spot Bitcoin exchange-traded funds and shifting perspectives on the monetary policy outlook.
At the time of this writing, the value of BTC stands at $43,381.99, reflecting a 2.8% increase since yesterday and a decrease of 0.1% from an hour ago. The current value of Bitcoin is 10.0% higher than what it was seven days ago.
The current valuation of cryptocurrencies on a global scale is $1.75 trillion, representing a change of 2.73% over the last twenty-four hours and 63.46% over the last year. BTC’s market cap currently stands at $851 billion, signifying a 48.76% market share for Bitcoin. Stablecoins, meanwhile, have a market cap of $137 billion, or 7.84% of the total crypto market cap.
Bloomberg data indicates that a streak of five consecutive monthly gains would be the longest since a six-month period beginning in October 2020 and ending in March 2021. In November of 2021, the token peaked at nearly $69,000.
On January 11, spot Bitcoin ETFs issued by BlackRock Inc. and Fidelity Investments commenced trading in the United States. Prior to the debuts of the ETFs last year, the token increased by nearly 160% in an attempt to entice new investors.
According to Bloomberg data, the 10 ETFs have received a net $1 billion in investment. Bloomberg Intelligence reports that the group’s ETF debut was the most successful in history, based on both trading and flow indicators.
Major altcoins lead the market recovery
Investors are also waiting for the Federal Reserve’s interest-rate decision this week, with nearly even odds for a drop in March. Changes to that view might have a significant influence on Bitcoin and other crypto markets, which are sensitive to shifts in sentiment and perceptions of liquidity.
The crypto market has increased by more than 2% in the last 24 hours. During this time, Bitcoin gained 3%, Ethereum gained 1.75%, and Solana and Cardano surpassed the market by adding 5.7% and 8.3%, respectively.
The outperformance of key altcoins indicates that participant interest has expanded beyond the two main coins. However, don’t expect persistent demand for smaller altcoins or meme coins this year; this typically occurs after a strong bull market.
Bitcoin has surpassed its 50-day moving average, rising beyond $43.3K. This is significant but not yet conclusive evidence of a bullish trend. However, the altcoins’ persistent upward performance over the last six days is fueling optimism, positioning Bitcoin for a test over $46,000.
According to CoinShares data, BTC investments have declined by $479 million, Ethereum by $39 million, and Solana by $3 million. Investments in funds that allow investors to open bitcoin short positions climbed by $11 million.
Despite huge outflows from the “old” Grayscale fund (totaling $5 billion since 11 January), withdrawals declined over the week. In comparison, freshly launched US ETFs saw $1.8 billion in inflows, totaling $5.94 billion since their introduction on January 11, according to CoinShares.
