Bitcoin Hits Two-Month High.. Will the Momentum Continue?

SadaNews - Bitcoin has registered its highest level in two months, finally joining the wave of rising high-risk assets and precious metals, after a long period of trading within a narrow range.

The largest cryptocurrency rose by 2.4% to reach $96,348 in early Wednesday trading in Singapore, the highest level since November 16. Ethereum, the second largest cryptocurrency by market capitalization, jumped by 5.1%.

This rise has led to the liquidation of short positions worth over half a billion dollars in the options market that were betting on falling cryptocurrency prices.

Bitcoin had suffered losses exceeding 6% since the beginning of 2025, after ending the previous year with modest performance, remaining within a narrow trading range and largely detached from the surges seen in equity and precious metal markets.

Signs of Potential Price Breakout

However, the currency has shown signs of a possible surge during January, as traders believe it may be able to outperform competing asset classes.

Justin Danithan, head of research at Arctic Digital, stated, "In the medium term, I think we could see an increase in investors’ allocations to Bitcoin based on the narrative of catching up to gold, while other high-risk assets perform strongly."

He pointed to a report released on Tuesday showing that core inflation in the U.S. rose less than expected, which supported the cryptocurrency at the same time tensions around the U.S. Federal Reserve escalated, which earlier this week received subpoenas from a grand jury under the Justice Department.

Danithan added that these developments highlight "the value of safe-haven assets and tangible assets" compared to the U.S. dollar.

Severe Pressure on Short Selling Positions

Vincent Liu, chief investment officer at Kronos Research, noted that another factor is "severe pressure on short selling positions" in Bitcoin derivative markets.

According to CoinGlass data, about $290 million worth of short selling positions in Bitcoin were liquidated in the last 24 hours. Across all cryptocurrencies, short positions worth nearly $600 million were liquidated.

Macroeconomic Environment Supports Bitcoin Performance

Investors pumped $754 million into the twelve Bitcoin funds listed in the U.S. on Tuesday, the highest level since October 7, reaffirming confidence that the upward trend still has room to continue.

Tony Sycamore, an analyst at IG Australia, mentioned in a note that a sustained breakout above $95,000 would pave the way for a rise to $100,000, and "perhaps to the 200-day moving average as well, which currently stands at $106,115."

Overall, traders see the current macroeconomic environment as supportive of Bitcoin’s performance, according to Joshua Lim, global co-head of markets at FalconX.

He added that tensions in Venezuela, unrest in Iran, the ongoing debate around the autonomy of the Federal Reserve, and MSCI's decision to suspend the plan to exclude companies with significant investments in cryptocurrencies like Strategy from major indices create "a continuous stream of positive macroeconomic developments" in favor of Bitcoin.