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Bitcoin () hovered around $23,000 on Feb. 1 following the sealing of its best performance in January in a decade.
End of Bitcoin bear market is "default view"
Data from Cointelegraph Markets Pro and TradingView confirmed a monthly close of around $23,100 for BTC/USD — its highest since July 2022.
The largest cryptocurrency finished the first month of the year up 39.6%, according to statistics from Coinglass.
The impressive performance emboldened bulls, many of whom had kept the faith despite mass misgivings from more conservative market participants.
“Bitcoin closes with a Monthly swing low,” trader, entrepreneur and investor Bob Loukas reacted.
"I mean, you can do anything. But the absolute default view must be the bear market ended in Dec.”
As Cointelegraph reported, opinions differ considerably over how Bitcoin will behave in February, with one trader expecting “bearish” conditions to return after five-month highs.
The picture for the coming month remains overshadowed by macroeconomic factors. Notably, Feb. I will see the U.S. Federal Reserve confirm their upcoming interest rate hike, and the European Central Bank will do the same in February. 2.
While the former hiking 25 basis points (bps) is all but “unanimously” priced in, crypto research and analysis firm Arcane Research says, the future remains less certain.
“Due to a relatively strong market recovery, Chair Powell may take the advantage to maintain hawkish restrictive undertones, emphasizing the importance of incoming economic data,” it argued in a blog post released on Jan. 31, adding that consensus “expects a 25bps hike on Wednesday and another 25bps hike to 475bps on March 22.”
“Currently, zero adjustments during the May 3 and June 14 FOMC meetings are priced as the most likely outcome, but a further hike of 25bps remains within the realm of possibility,” it noted.
Expectations of a 25-basis-point hike totaled 99.3% at the time of writing, according to CME Group's FedWatch Tool.
Federal Reserve Target Rate Likelihood Table.
Arcane has however shown that with each temporary rise, volatility around the Fed movement has cooled.
If the door were open to surprises, volatility could increase accordingly, since decisions to raise rates are already a traditional catalyst.
Dollar strength eyes key rebound
Another concern for crypto performance comes in the form of U.S. dollar strength.
Related: Best January since 2013? 5 things to know in Bitcoin this week
In a market update last week, trading firm QCP Capital warned subscribers that a “massive positive divergence” was in play on the U.S. dollar index (DXY).
Traditionally in reverse correlation with risk assets, dxy has been trending downwards since mid-2022.
5 things you need to know about Bitcoin this weekIn an update from the market last week, QCP Capital has warned policyholders that there is a "massive positive divergence" on the US Dollar Index (DXY).
