Main navigation

Charles Edwards Explains Key Reason for Bitcoin's Price Gain in January

Thu, 02/02/2023 - 16:28
article image
Tomiwabold Olajide
He outlines three key events
Charles Edwards Explains Key Reason for Bitcoin's Price Gain in January
Cover image via

Disclaimer: The opinion expressed here is not investment advice – it is provided for informational purposes only. It does not necessarily reflect the opinion of U.Today. Every investment and all trading involves risk, so you should always perform your own research prior to making decisions. We do not recommend investing money you cannot afford to lose.

Read U.TODAY on
Google News

On-chain analyst and founder of Capriole Fund Charles Edwards explains the sequence of events that led to the massive short squeeze that triggered a 40% increase for Bitcoin in January.

He outlines these three events as follows: first, a catastrophic event such as that seen in November 2022 during the FTX implosion causes a long-side liquidation.

This was followed by a period of sideways activity, which led to a build-up of excessive short-bias in the market, coupled with negative sentiment.

Then, lastly, a massive short squeeze and rally to the upside occurred as incremental buyers step into an illiquid sell-side order book.

The market leverage ratio, a Capriole measure for aggregate leverage and positioning on the market, also corroborates the similarity of events, as an almost identical pattern occurred in January 2023 to that of mid-2021.

In simple terms, the underlying reason for the rise in Bitcoin's price in January was that the market still expected lower prices due to the prevalent bearish market conditions in 2022.

The negative sentiment and build-up of short positions led to a "short squeeze," which refers to when excessive short selling pushed an asset's price higher.

Positive indications lining up for Bitcoin

At the time of publication, Bitcoin was up 2.61% at $23,862 after reaching intraday highs of $24,262. Cryptocurrencies recovered after Federal Reserve Chair Jerome Powell noted there were indications of waning inflation.

Bitcoin Bottom Is In, Seven Signals Say: Analyst Charles Edwards

Charles Edward, in an earlier tweet, stated that Bitcoin's OGs were acquiring the lead cryptocurrency at the fastest pace in eight years. "Bitcoin's ultra long-term holders (those that have held 5+ years) are accumulating exponentially in the last 6 months. These holders almost never sell," he added.

article image
About the author

Tomiwabold is a cryptocurrency analyst and an experienced technical analyst. He pays close attention to cryptocurrency research, conducting comprehensive price analysis and exchanging predictions of estimated market trends. Tomiwabold earned his degree at the University of Lagos.