Bitcoin has been pumping since the start of 2023. The world’s first and largest cryptocurrency by market capitalization was last changing hands close to $21,000, up a stunning 27% so far on the month. That means Bitcoin is on course for its best monthly gain since October 2021, despite the month still having 15 days to go.
In light of the recent surge, Alternative.me’s popular Bitcoin fear and greed index moved out of “fear” for the first time since April 2022 over the weekend, hitting 52 before dropping back to 45 on Monday.
The latest rally has attracted the usual predictable scepticism from bears on social media, many of whom have been dismissing Bitcoin’s most recent recovery as a “bull trap”. In fairness, selling rallies was the playbook for 2022.
But 2023 is going to be a vastly different year to 2022. 2022 was a year characterized by 1) big upside inflation surprises in key global markets like the US and Europe and 2) aggressive subsequent rate hikes from the likes of the US Federal Reserve and European Central Bank. The recent shift in economic data, particularly in the US, suggests that 2023 is much more likely to be a year of downside inflation surprises and easing expectations for Fed tightening.
As a result, this latest Bitcoin rally feels different. One closely followed options market indicator shows that investors have become the most optimistic on Bitcoin’s six-month performance outlook since the start of 2022.
Bitcoin’s 180-day call-put skew recovered into positive territory on Monday for the first time in a year, according to crypto derivatives data analytics firm Amberdata. That means bullish cash options expiring in six months now cost more than bearish put options of the same expiry.
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