Bitcoin's price has surged to a two-month high, maintaining its cautious upward momentum into January as geopolitical uncertainties enhance its appeal. Early Wednesday in Singapore trading, Bitcoin climbed as much as 2.4% to $96,348, reaching its highest intraday level since November 16. The second-largest token, Ethereum, also saw significant gains, jumping up to 5.1%. After a relatively flat end to 2025, Bitcoin started the new year by falling more than 6%, trading within a narrow range and largely ignoring rallies in equities and precious metals. However, throughout January, the token has shown signs of a potential breakout, with traders now considering it might gain an upper hand among alternative asset classes. "Over the medium term, I think investors are likely to allocate more funds to Bitcoin based on the logic of 'catching up to the gold rally'—while other risk assets are also performing strongly at the moment," said Justin d'Anethan, Head of Research at Arctic Digital. He noted that a report released on Tuesday, which showed U.S. core inflation rising less than expected, provided a tailwind for the token. Furthermore, tensions surrounding the Federal Reserve have also acted as a catalyst—earlier this week, the U.S. Department of Justice served the Fed with a grand jury subpoena. d'Anethan pointed out that the Fed event highlights the value of "safe-haven assets and hard assets relative to the U.S. dollar." Another factor, according to Vincent Liu, Chief Investment Officer at Kronos Research, is a "violent short squeeze" in the Bitcoin derivatives market. Data from CoinGlass indicates that approximately $270 million in Bitcoin short positions were liquidated over the past 24 hours. Across all cryptocurrencies, roughly $600 million in short positions were wiped out. Taken together, traders view the current macro backdrop as favorable for Bitcoin, according to Joshua Lim, Global Co-Head of Markets at FalconX. He pointed out that a combination of factors—tensions in Venezuela, turmoil in Iran, debates over Federal Reserve independence, and MSCI's decision to shelve plans to remove companies with high crypto exposure like Strategy from major indices—collectively form a "continuous stream of positive macro tailwinds" for Bitcoin.
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