The largest crypto in the world by market cap was last trading for almost $21,000, up a startling 27% on the month.
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Bitcoin has been rising since the beginning of 2023. The first and largest cryptocurrency in the world by market capitalization was last trading for almost $21,000, up a startling 27% on the month. With 15 days left in the month, Bitcoin is on track for its highest monthly increase since October 2021.
Due to the recent increase, the popular Bitcoin fear and greed index tracked by Alternative.me jumped out of "fear" for the first time since April 2022 over the weekend, reaching 52 before falling to 45 on Monday.
Those who are bearish about Bitcoin have expressed their usual predictable skepticism on social media, with several of them calling the most recent increase a "bull trap." In fairness, the strategy for 2022 called for selling rallies.
This Rally Could Be New
However, 2023 will be a significantly different year than 2022. The year 2022 was marked by significant upward surprises in inflation in major global markets, including the US and Europe, and rapid rate rises from entities like the US Federal Reserve and the European Central Bank that followed. According to the most recent changes in economic statistics, specifically in the US, 2023 is far more likely to be a year of unexpectedly low inflation and easing expectations for Fed tightening.
As a result, the current Bitcoin surge seems different. A closely observed indicator of the options market reveals that since the start of 2022, investors' expectations for Bitcoin's performance over the next six months have increased the most.
According to crypto derivatives data analytics firm Amberdata, Bitcoin's 180-day call-put skew returned to positive territory on Monday for the first time in a year. As a result, bearish put options with the same expiration date now cost more than bullish cash options with the same expiration date.
In a recent email to clients, Mark Connors, head of research at 3iQ, stated, "We see the current rally in digital assets as a market reversal and NOT a bear market rally." Connors stated that recent less aggressive comments from Fed policymakers indicate that the sudden drop in the money supply in 2022 may be coming to an end.
These Signs Indicate a Shift From Crypto-Winter to Spring
The idea that the crypto winter might finally come to an end is also backed by other widely used technical indicators. First and foremost, Bitcoin has successfully broken back above its 200-day moving average for the first time since December 2021.
Bitcoin bulls are hoping that January's bullish 200DMA break could mark the beginning of a new bull market, just as April 2021's failed attempt to get back above the 200DMA ended up as a key market turning point (Bitcoin would go on to drop another 67% in 2022).
According to Glassnode, "since the 200-day SMA is so widely observed by market analysts, it tends to carry significant weight on investor psychology when it is convincingly broken... It is often considered a minimum macro bull or bear threshold level."
Moreover, Bitcoin's most recent recovery has restored it to the region of its realized price, which, according to Glassnode, was last at about $19,700, for the first time since early November. This indicates that the average Bitcoin holder is currently holding an unrealized profit and is "under a smaller degree of acute financial stress."
Source: Glassnode
Glassnode data shows that for the first time since December 2021, Bitcoin is once again north of both its 200 DMA and realized price.
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