Bitcoin's rise to $24,000 was greeted with enthusiasm by some market participants, and institutional investors' forecasts began once again to talk about the cryptocurrency potentially reaching $100,000. Despite a slight revival, not all indicators support a positive outlook.

January is about to be the best month in 10 years for Bitcoin, which rose by 40% in that time. Institutional investors, who until a fortnight ago invested in short funds ($25.5 million versus $5.7 million), showed the best demand for cryptocurrency in the past six months. The Bitcoin ETF had inflows of $116 million last week.

Whales, who withdrew an average of $25 million worth of Bitcoin daily from cryptocurrency exchanges in January, also contributed to its price growth. They didn't use this rise for the classic reserve sell-off, which supported the coin's momentum. The second factor was the massive closing of short positions (mainly from stop losses), which also acted as a trigger. In total positions liquidated, the share of bears reached 85%, higher than for bulls at the time of FTX's collapse.

This suggests that Bitcoin's January 2023 rise was technical in nature as fundamental demand for the cryptocurrency remains low. Total open interest on cryptocurrency exchanges continues to decline, falling from 650,000 BTC in mid-November to the current 414,000 BTC. A similar pattern is shown by the decline in Bitcoin's overall turnover on the network, lagging significantly behind the annual average.

Bitcoin is an oversold asset. As of 1 January, long-term holders of the last five years have incurred unrecorded losses.

It'll be challenging to maintain the momentum gained in January due to the lack of widespread demand and persistent liquidity outflows from financial markets.

StormGain Analytics Team
(a cryptocurrency trading, exchange and storage platform)