Bitcoin (BTC) January price hike explained by on-chain analyst Charles Edwards BTC $BTC
This was followed by a period of sideways activity, which led to a build-up of excessive short-bias in the market, coupled with negative sentiment.
Then, lastly, a massive short squeeze and rally to the upside occurred as incremental buyers step into an illiquid sell-side order book.The market leverage ratio, a Capriole measure for aggregate leverage and positioning on the market, also corroborates the similarity of events, as an almost identical pattern occurred in January 2023 to that of mid-2021.
In simple terms, the underlying reason for the rise in Bitcoin's price in January was that the market still expected lower prices due to the prevalent bearish market conditions in 2022. The negative sentiment and build-up of short positions led to a"short squeeze," which refers to when excessive short selling pushed an asset's price higher.At the time of publication, Bitcoin was up 2.61% at $23,862 after reaching intraday highs of $24,262. Cryptocurrencies recovered after Federal Reserve Chair Jerome Powell noted there were indications of waning inflation.
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