It’s no secret that the global economy has continued to weaken over the past year. Up to this point, on January 19, the US government hit its “debt ceiling,” the total amount of money that the US Treasury can borrow to fund its ongoing federal operations, leading to renewed fears of more financial and economic pain. Slowdown could be in.

Similarly, on the other side of the Atlantic, the United Kingdom was also struggling. This is evidenced by the fact that the number of business bankruptcies registered in 2022 reached 22,109 – a 57% rise on the previous year and the highest rate since 2009. Not only that, the International Monetary Fund recently released a report indicating that the UK will be the only country In the Group of Seven, which faces a recession this year.

However, amid all this devastation, the cryptocurrency market seems to have caught some wind over the past month. In January, the total capitalization of this sector increased from $828 billion to nearly $1.1 trillion, indicating a rise of approximately 32%. Focus on Bitcoin

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In particular, on January 30, the cryptocurrency surged to $24,000 after apparently stagnating around the $16,500 range for the better half of November and December.

In fact, the share of assets in the total market cap rose to 44.82% recently, which is the highest level since June last year. As a quick fix, this number usually only rises sharply when investors start reducing their exposure to altcoins and pouring their capital back into BTC.

Is $25,000 the Next Stop for Bitcoin?
After successfully defending a price target of $22,500 since January 20, Bitcoin is currently showing a 30-day winning percentage of around 40%. That sudden rally was mirrored by a similar rally in the stock market, which recently rallied after China eased its COVID-19 restrictions after three long years of strict pandemic controls.

Bitcoin price chart for 30 days. Source: CoinGecko
Moreover, according to data provided by financial services company Matrixport, US institutional investors currently account for 85% of all recent Bitcoin accumulation activity, indicating that major players are not ready to give up on the digital asset market. Thus, to get a better understanding of where the industry could be heading in the near term, Cointelegraph reached out to Timothy T. Chan, chief operating officer of Avalanche-based decentralized exchange Dexalot. From his point of view:

“I think the recent rally in Bitcoin was a positive surprise given all the negative news in the industry that hasn’t been fully implemented yet. However, I don’t think this current rally is sustainable and users should expect more volatility.”
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On a somewhat similar note, Frederic Fernandez, co-founder of DeFi trading app DEXTools, told Cointelegraph that the new year could be bullish for the cryptocurrency market if and only if the global economy is able to post a rebound of some kind. This is because a large-scale trend reversal can boost demand for alternative investments and increase liquidity in the market.

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“The market could remain bearish if economic uncertainty increases as restrictive regulations may be imposed. However, if bitcoin reaches $25,000, it could mean increased confidence and acceptance of cryptocurrencies leading to higher investment and widespread adoption.”

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According to Luuk Strijers, Chief Commercial Officer of Bitcoin and Ether

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Deribit Options Exchange The cryptocurrency market is slowly returning to greener pastures. Backing up the claim, he told Cointelegraph that the market is once again experiencing a “contango,” a situation where the futures price of an asset is higher than its spot price. In layman’s terms, contango is usually observed when the price of a particular asset is set to rise over time.

He said that BTC’s 25-Delta put skew has gone from over 30% to below zero, which is a bullish sign. The aforementioned metric allows analysts to predict the price movements of an asset as well as estimate future volatility (volatility) based on certain predictive factors. Strijers noted, “The one-month decrease in skew indicates that shorter-time out-of-the-money calls are getting more expensive compared to out-of-the-money puts, which is a bullish sign.”

He also highlighted that open interest regarding Bitcoin and Ether options is growing again, which is a positive sign especially when considering that much of that momentum has been lost after last year’s big end-of-year expiry.