Bitcoin Echoes COVID-19 Rally, Targets All-Time High – Is a Bull Market Imminent?

  • Bitcoin is set to register its fifth consecutive month of gains, marking its longest winning streak since the pandemic-induced surge driven by abundant liquidity
  • The month of January witnessed the introduction of the first US spot Bitcoin exchange-traded funds and evolving perspectives on monetary policy, contributing to a nearly 2% increase in the value of the largest digital asset
  • The consistent upward movement of altcoins in the past six days has instilled optimism, potentially positioning Bitcoin for a challenge above the $46,000 mark
In 2020, the COVID-19 pandemic significantly affected Bitcoin, initially causing a sharp decline in line with traditional markets due to panic-selling. However, Bitcoin's resilience emerged as it swiftly rebounded, attracting new investors seeking refuge from economic uncertainties. Now, Bitcoin is experiencing another notable upsurge, echoing the rally seen during the pandemic. This surge is driven by various factors, including macroeconomic shifts, institutional interest, and regulatory changes.

Bitcoin's remarkable resurgence evokes memories of the pandemic-induced rally.

Bitcoin is set to achieve its fifth straight month of gains, marking its longest winning streak since the pandemic-era rally driven by abundant liquidity. In January, the cryptocurrency surged by approximately 2%, amid significant market fluctuations triggered by the introduction of the first US spot Bitcoin exchange-traded funds and evolving monetary policy perspectives. As of the current writing, Bitcoin's value stands at $43,381.99, reflecting a 2.8% increase from yesterday and a 0.1% decrease from an hour ago. The cryptocurrency's value is 10.0% higher than it was seven days ago. The total global cryptocurrency market capitalization stands at $1.75 trillion, with a 2.73% change over the last twenty-four hours and a 63.46% change over the last year. Bitcoin's market cap is $851 billion, representing a 48.76% market share, while stablecoins have a market cap of $137 billion, accounting for 7.84% of the total crypto market cap. According to Bloomberg data, achieving a streak of five consecutive monthly gains would be the longest since the six-month period from October 2020 to March 2021. In November 2021, Bitcoin reached a peak of nearly $69,000. Spot Bitcoin ETFs issued by BlackRock Inc. and Fidelity Investments commenced trading in the United States on January 11. Prior to the launch of these ETFs last year, Bitcoin's value surged by nearly 160% in an effort to attract new investors.

The market recovery is spearheaded by major altcoins.

Investors are eagerly anticipating the Federal Reserve's interest rate decision this week, with nearly even odds for a rate drop in March. Any changes to this outlook could significantly impact Bitcoin and other crypto markets, which are highly sensitive to shifts in sentiment and perceptions of liquidity. The crypto market has surged by over 2% in the past 24 hours. Bitcoin rose by 3%, Ethereum by 1.75%, while Solana and Cardano outperformed the market with gains of 5.7% and 8.3% respectively. This strong performance of key altcoins suggests that investor interest has broadened beyond the top two coins. However, sustained demand for smaller altcoins or meme coins is not expected this year, typically occurring after a robust bull market. Bitcoin has surpassed its 50-day moving average, reaching over $43.3K. While this is a significant development, it is not yet conclusive evidence of a bullish trend. Nevertheless, the consistent upward performance of altcoins over the past six days is fostering optimism, positioning Bitcoin for a potential test above $46,000. According to CoinShares data, investments in Bitcoin have declined by $479 million, Ethereum by $39 million, and Solana by $3 million. Conversely, investments in funds allowing investors to open bitcoin short positions have increased by $11 million. Despite significant outflows from the "old" Grayscale fund amounting to $5 billion since January 11, withdrawals have decreased over the week. In contrast, newly launched US ETFs have witnessed $1.8 billion in inflows, totaling $5.94 billion since their introduction on January 11, according to CoinShares.