2022 was a difficult year for crypto investors. The crypto lenders and exchanges fell like houses of cards as the bears ruled the market. After the massive decline of around 70% in 2022, analysts believe that 2023 could also be bearish. Surprisingly, the beginning of 2023 was quite the opposite for the market, specifically Bitcoin.

The largest cryptocurrency, Bitcoin, marked a historic January as it soared by around 40%. It was also the best month for the token since October 2021. Meanwhile, the price surge finally inspired some confidence among investors. But can it keep the upward trend going? Here are three reasons why the current spike could indicate a bull market!

1. Best January for BTC in a Decade

BTC made historic gains in January 2023 and marked the best January for the most dominant cryptocurrency in a decade. Previously, it recorded a historic January back in 2013, which was the first year when its price actually started gaining momentum. According to Coinglass, BTC saw an increment of over 44% in January 2013.

But the year’s beginnings have been quite unpleasant for BTC in the past decade. Other than the bull cycle of 2020 to 2021, the token mostly struggled. Then again, in January 2022, BTC’s price plummeted by more than 16%, which marked the beginning of a tumultuous year. If you are trading crypto in 2023, it is advisable to know how to identify bull and bear flags.

At the beginning of 2023, BTC changed hands at around $16.5K. However, despite the fear of crypto winter, it made consistent gains throughout the month. Towards the end of January 2023, it even touched $24K. After that, however, it lost some value and closed the month at almost $23K.

Bitcoin’s performance defied all the bearish predictions as it increased by 40%. As a result of this rally, Bitcoin may cross $25K later in February. Though this price is nowhere near Bitcoin’s all-time high value, it’s quite impressive compared to its performance in 2022. It is also a crucial rally for the token as it may trigger positive changes in the long-term trends.

2. The Effect of Interest Rate Hikes

Macroeconomic events play a huge role in how the market behaves. That’s why it is important to note that the Federal Open Market Committee (FOMC) raised interest rates by 0.25% on 1st February 2023. It means the Federal Reserve is looking to strengthen USD to keep inflation under control. Usually, an interest rate hike triggers volatility in the crypto and stock market as asset prices may fall.

Following the decision, BTC price also experienced volatility in the first week of February 2023. According to CoinMarketCap, BTC’s price fluctuated between $22K to $24K in the past seven days. Nonetheless, at the time of writing, Bitcoin is maintaining its price above $23K.

This suggests that although interest rate hikes triggered volatility, Bitcoin sustained its position. It is one of the reasons behind the bullish bias in the market.

3. Crossed Support Level

Bitcoin has also crossed its current support level, which is $22.8K. If it continues to increase to $23.5K, bulls will likely take over again. In addition, it may also prompt the coin to breach the psychological level of $25K. It means traders may take bullish positions.

However, rejection at this level may set off a price correction, pushing its price to around $22.3K. Moreover, if the bearish trends continue, BTC might drop to around $21K, which is its 50-day Exponential Moving Average (EMA).

Nevertheless, $22.2K to $22.8K is a strong support zone for Bitcoin. Also, the buying pressure is likely to increase in the coming days of February. It may boost the coin to continue its bullish rally to $25K.

Can the Crypto Market Sustain Its January 2023 Gains?

The crypto market has seen a long and dreadful winter with several bankruptcies and collapses. But the beginning of 2023 has been quite remarkable. The largest crypto in market cap, Bitcoin, marked the Best January in a decade. It is pushing towards the $23.5K mark and may end February with $25K.

Moreover, the market has evaded volatility even after the interest rate hikes. It is one of the reasons for the rise in investors’ confidence. So, if the market avoids exhaustion, it may become the beginning of a bull cycle.

​The information on this website does not constitute financial advice, investment advice, or trading advice, and should not be considered as such. MakeUseOf does not advise on any trading or investing matters and does not advise that any particular cryptocurrency should be bought or sold. Always conduct your own due diligence and consult a licensed financial adviser for investment advice.