Experts See Three Reasons Why Bitcoin Surged Higher in January 2023

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Last Updated on 6 November 2023 by CryptoTips.eu

We are now halfway through January 2023 and it seems that the first signs of positivism are returning to the market, both for crypto and equities. Bitcoin rose from $16,000 to a maximum value of $21,400 and there are three main reasons for this, according to experts.

Advertentie.

Bottom

First of all, it seems that Bitcoin has formed a temporary bottom around the $16,000 level. After the major crypto platform FTX went bankrupt in early November 2022, Bitcoin quickly plummeted from a value of $20,000 to an annual low of $15,500.

In the next two months, very little happened and the volatility of the largest digital currency dropped to historic lows. Most analysts now claim that many buyers then positioned themselves around the $16,000 to $17,000 level, meaning a strong bottom has been formed which acts as support.

Inflation and the Federal Reserve

Second, both inflation levels and Federal Reserve communication are moving in the right direction. In Europe and in the US, the inflation peak appears to have been reached and monthly inflation rates continue to fall.

It will be some time before we reach the desired 2% inflation level in major economies, but investors are already looking forward.

Communication from the Federal Reserve is also very important. Analysts hope that Jay Powell will decide at the end of this month to allow interest rates to rise only half a percent in the US now that the inflation peak has been reached.

Dollar

Finally, there is that very important dollar index, or DXY. Whenever stock markets go lower, investors seek so-called safe havens. In 2022, the ultimate safe haven was the US dollar index.

This was because the Federal Reserve raised interest rates fairly quickly (faster than the ECB and the Bank of England) and stopped printing extra dollars.

Oil turned out to be very volatile due to the war in Ukraine and other foreign currencies were also seen as risky in 2022. All this resulted in a lot of investments in the dollar index.

Bitcoin, which is quoted in dollars, therefore had to deal with additional price pressure in 2022 due to the strong dollar.

In 2023, the empire of king dollar seems to be coming to an end for the time being and the DXY index has dropped sharply. These moves by investors takings profits on DXY are very good news for Bitcoin.

So overall a good start to the year, but don’t be fooled to quickly. Enjoy the positive trend but be aware of the economic conditions which can change quickly and take into account profit taking by traders betting on the short term.

Safe trading everyone.

Jeroen Kok

Jeroen is one of the lead copywriters on Cryptotips.eu and discusses all recent events in the crypto market. This includes news updates, but also price analyzes and more. He developed his passion for cryptocurrency during the bull run in 2017. He has learned a lot since then. The combination of cryptocurrency and creative writing is perfect for Jeroen and an excellent way to share his knowledge with a wide audience. Find me on LinkedIn / [email protected]
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