Bitcoin is on Track for the Best January Since 2013

Bitcoin remained buoyant last week as the coin continued to set up one of the best Januarys since 2013. 

As investors anticipate this week’s FOMC interest rate decision, several on-chain and technical indicators turned bullish. Echoes from the 2018-2019 bottom discovery phase are now being witnessed.

Elsewhere, Tesla’s fourth-quarter earnings revealed that the company continues to HODL the world’s leading cryptocurrency and Litecoin’s hashrate and active wallets reached a new all-time high.

• Bitcoin remains on track for the best January since 2013
• Key technical indicator for bitcoin flashes bullish
• Q4 earning report shows that Tesla continues to HODL BTC
• Litecoin price continues to climb as hashrate and wallet count reach new all-time highs

Bitcoin is on track for the best January since 2013

Bitcoin has increased by 40% since the start of the year, which may result in the biggest price increase for the month of January since 2013. 

Bitcoin has been pushed higher in January due to a falling US dollar, cooling inflation, and an overall change in investor sentiment regarding the future monetary policy tactics that may be implemented by the US Federal Reserve. This has led to an increase in bullish trading activity.

According to on-chain analytics provider, Glassnode, the recent climb to $23,000 has shifted many on-chain pricing models that “historically signifies a psychological shift in holder behavior patterns.”

Glassnode’s Investor and Delta price models indicate that bitcoin’s price has now spent an equal amount of time in a bearish bottom phase when compared with the previous 2018-2019 bear market. 

Bitcoin’s price has spent 76 days between the band of investor price  – which is defined as the acquisition price for all bitcoins that have been spent by miners – and the delta price – which is defined as the difference between the true market cap, and the market cap based on the price that all bitcoins were last moved. 

Bitcoin’s price spent 78 days within the band during the 2018-2019 bear market cycle, which coincided with the market bottom.

According to Glassnode, the compression of the band can also help to define the start and end of a bottom discovery phase. 

Based on current on-chain metrics, Glassnode estimates that an end to the latest bottom discovery phase would be confirmed if bitcoin’s price reached $28,000. 

Investor’s eyes are now focused on Wednesday’s upcoming Federal Open Market Committee (FOMC) where the Fed’s next interest rate decision will be revealed. This will likely determine if $28,000 can be achieved in the near future.

Bitcoin investor and delta price models highlight the similarity in time for the bottom discovery phase when comparing the latest bear market cycle with 2018-2019. 

Key technical indicator for bitcoin flashes bullish

To further bullish momentum, on Wednesday, on-chain analyst firm, CryptoQuant, estimated that a new bull market could now be underway.

According to CryptoQuant’s PnL index, a definitive buy signal occurred last week. The PnL index is a composite indicator that draws data from the Market Value to Realised Value (MVPR) ratio, Net Unrealized Profit and Loss (NUPL), and the Spent Out Profit Ratio (SOPR).

The combination of these indicators provides an overview of profitability which can then be compared to a moving average. 

“Although it is still possible for the index to fall back below, the CryptoQuant PnL Index has issued a definitive buy signal for Bitcoin” according to CrypoQuant’s report. 

A definitive buy signal on the PnL index occurs when the index climbs above the 365-day moving average (purple line). This signal has defined the start of each previous bull market. 

 CryptoQuant’s on-chain PnL index crosses the 365-day moving average

Q4 earnings report shows that Tesla continues to HODL BTC

According to the latest earnings report, even through market turmoil, the electric car manufacturer, Tesla, has continued to hold bitcoin on the company balance sheet. 

The company did not buy or sell any coins during the fourth quarter of 2022, which now stands at a value of $184 million. As a result of the fall in bitcoin’s price at the end of last year, the value of the company’s digital assets was down from the third-quarter valuation of $218 million. 

Elon Musk’s car manufacturer acquired $1.5 billion worth of bitcoins in early 2021, joining companies such as MicroStrategy and Square to become one of the first to hold bitcoin on a company balance sheet. 

Due to uncertainty regarding Covid-19 lockdowns and a need to maximize the company’s cash position, Tesla sold 75% of all bitcoin holdings in the second quarter of last year. An amount that was worth $936 million at the time.

Even so, Tesla still continues to maintain exposure to the world’s leading cryptocurrency with its remaining holdings. With prices now up 40% in January 2023, there are no signs that Elon Musk’s company wants to sell further.  

Litecoin price continues to climb as hashrate and wallet count reach new all-time highs

Litecoin’s hashrate peaked at a new all-time high-level last week as more computing power was dedicated to the network. The number of total active wallet addresses also surged last week, overtaking Ethereum for the first time.

Over the last 30 days, the blockchain’s computing power has increased by 38%.

According to data collected by CoinWarz, the all-time high hashrate was recorded on 25th January with a record output of 798 TH/s. Viabtc remains the top Litecoin mining pool and contributes approximately 27% to the total.

As a result of the latest hashrate increase, Litecoin developers are now expecting the network to increase mining difficulty during the next difficulty adjustment. This occurs every 3 days and ensures that Litecoin’s block time remains consistent.

To accompany advances in the network’s computing power the price of Litecoin increased by 9% during the week and peaked at a week high of $96.

Litecoin remains the first mainstream Proof-of-Work blockchain to halve its mining rewards during the year. The Litecoin halving event is currently scheduled for 3rd August 2023 and will halve block rewards from 12.5 LTC to 6.25 LTC, leading to a reduction in overall supply.

Litecoin hashrate from December 2022 to January 2023.

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