Bitcoin's 40% rally in January, the best in a month since 2020, massive capital inflows into cryptocurrency-focused ETFs, and a $250 billion increase in market capitalization over the past four weeks suggest that the worst is over. The market has moved on from the FTX bankruptcy, overlooked the collapse of crypto lender Genesis Global Holdco, and is growing by leaps and bounds. The clarity regarding bankruptcy procedures and corporate restructuring, as well as the improvement of fundamental characteristics supports it.

Bitcoin Monthly Dynamics

The main driver of the BTCUSD rally in the new year is a significant improvement in global risk appetite. Bitcoin is responding to the call of the desperately rising U.S. stock indices and outperforms them, thanks to the gloomy forecasts in 2022. Only few will remember that the bears were seriously talking about $5,000 per coin. In early February, it costs almost five times more.

In January, cryptocurrency-focused ETFs added more than $210 million, the best result since May. The total assets under ETF management rose 37% to $19.7 billion, the highest since late spring 2022. This is impressive. Especially given how bad the past year has been for the crypto industry.

Dynamics of capital inflows into cryptocurrency-focused ETFs

As with other risky assets, there were fears that bitcoin was running ahead of itself and Jerome Powell would punish it for its antics at the press conference following the February FOMC meeting. In fact, the Fed chairman didn't scare or even impress the markets. He agreed that the market disagreed with the Committee's projections of a federal funds rate cut at the end of 2023. According to Powell, everyone has an opinion, and the central bank's opinion is that the cost of borrowing will remain at a peak of 5% this year.

The change in Powell's rhetoric must be sought for different purposes. If the Fed doesn't want to let high inflation return, then investors don't want to miss the last ride to the upward rally of the S&P 500. Ultimately, the Fed turned the tables on the markets and decided to take their signals for information. All the better for BTCUSD! If risky assets do not have to fight the central bank, their rally will likely continue. It is clear that not a single trend has been without corrections, but you need to understand that pullbacks are a reason to buy.

Technically, the formation of a pin bar on the BTCUSD daily chart is a bearish signal. As a general rule, a drop in Bitcoin quotes below its low at 23,375 is taken as a reason to sell. In our case, they will have a short-term character. In the future, it makes sense to use the rebound from dynamic supports in the form of moving averages that are part of the Alligator to form medium-term long positions.