Bitcoin has added 38% to its USD value since the beginning of the month when it was priced at around $16,846. This has made January the asset’s best-performing month since October 2021, when it notched up 41%, according to Glassnode.
The current rally was “fuelled by both historic spot demand and a sequence of short squeezes,” the analytics firm noted in its weekly report on Jan. 30.
It also reported stabilization in exchange flows following the FTX collapse and panic exodus from centralized exchanges.
“We also note that initial impulse of exchange outflows, in the aftermath of FTX have calmed to neutral, and are now balanced by newly motivated inflows.”
#Bitcoin markets have seen the strongest monthly price performance since Oct-2021.
This rally is fuelled by both spot demand, and a sequence of short squeezes
We explore these dynamics across derivatives markets, and spot exchanges in our latest piece?https://t.co/yNWSv2eI2A
— glassnode (@glassnode) January 30, 2023
Bitcoin Exchange Movements Normalize
Glassnode also noted that Bitcoin on-chain transactions spiked by over 50,000 per day over the past week. “We cannot see a corresponding increase in exchange deposits or withdrawal counts,” it added.
Exchange-related transactions accounted for 35% of the total, a metric that has been declining since May 2021. Even though exchange flows have normalized since the FTX collapse, the amount of BTC held on them is still in decline.
The total balance of Bitcoin stored on trading platforms is around 2.25 million BTC, the report said. This represents 11.7% of the circulating supply and is at a multi-year low last seen in February 2018.
Glassnode added that the total amount of BTC flowing into and out of exchanges was around $625 million per day in both directions. This shows that exchange flows are now evenly balanced following the turmoil of late 2022, when it was largely outflows.
“Today, exchange net-flows have returned to neutral, reflecting a cooling down of outflows,”
Most of the exchange activity for the month has been whales (addresses with more than a thousand BTC), it noted. In January, whales contributed between $185 million and $215 million to total exchange inflows and outflows.
BTC Price Outlook
BTC prices have taken a dip today, dropping 3% to $22,887 at the time of writing, according to CoinGecko. The asset came close to $24,000 on Jan. 30, but resistance proved to be too strong there.
Bitcoin prices have remained sideways for the past seven days but are up 8% in the past fortnight. Most of the gains in this rally were made in early January, hinting that it may be running out of steam.
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