New Year, new rally: Why bitcoin is up 26% this month after a tumultuous 2022
A number of factors are behind bitcoin’s New Year rise, according to analysts, including an increased probability of interest rates being lowered and purchases by large buyers known as “whales.”
Filip Radwanski | Sopa Images | Lightrocket | Getty Images
Bitcoin has begun 2023 on a positive note, with the price of the world’s largest digital token up roughly 26% since the start of January.
On Saturday, bitcoin’s price rose above $21,000 per coin for the first time since Nov. 7.
It’s still a far cry from the $68,990 record high bitcoin notched in Nov. 2021. But it has given market players cause for some optimism.
The month-to-date rally follows a grim 2022, which saw major insolvencies and scandals in the crypto industry, including the collapse of FTX, and a sharp pullback in the broader market linked to central bank actions.
Analysts say that a number of factors are behind bitcoin’s New Year rise, including an increased probability of interest rates being lowered, as well as purchases by large buyers known as “whales.”
New Year, new monetary policy?
Inflation is cooling down, and economic indicators suggest slowing U.S. economic activity. That’s made traders optimistic the Federal Reserve could reverse, or at least soften, its rate hiking strategy.
Last week, fresh U.S. inflation data showed a modest retreat, with the consumer price index decreasing 0.1% in December on a monthly basis, in line with Dow Jones estimates.
“Bitcoin looks to have recoupled with macro data as investors shrug off the FTX collapse,” James Butterfill, head of research at digital asset management firm CoinShares, told CNBC by email.
“The most important macro data investors are focussing on is the weak services PMI and the trending down of employment and wage data. This coupled with downwards trend in inflation has led to improving confidence, while it comes at a time when valuations for Bitcoin … are close to all time lows. The prospect of looser monetary policy off the back of weaker macro data and low valuations is what has led this rally.”
The Fed lifted borrowing rates seven times in 2022, forcing risky assets such as stocks — and tech stocks, in particular — into a tailspin. In December, the benchmark funds rate increased to 4.25%-4.50%, reaching its highest level since 2007.
Bitcoin has been caught up in the market drama around lending rates, as it is increasingly viewed by investors as a risky asset.
Backers previously talked up bitcoin’s potential as a “hedge” to buy in times of high inflation. But bitcoin failed to achieve that aim in 2022, instead slipping more than 60% as the U.S. and other major economies grappled with higher rates and living costs.
Yuya Hasegawa, crypto market analyst at Japanese crypto exchange Bitbank, said in a Jan. 13 note that this was “brewing a hope amongst market participants that the Fed will further slow down on the pace of rate hikes.”
The Fed is likely to keep interest rates high for the time being. However, some market players are hopeful that central banks will start easing the pace of rate rises, or even slash rates. Some economists predict a Fed rate cut could happen as soon as this year.
That’s as the risk of a recession is also playing on central bankers’ minds.
Some two-thirds of chief economists surveyed by the World Economic Forum believe a global recession is likely in 2023, according to research released by the Davos organizer on Monday.
The U.S. dollar has also sagged, with the greenback down 9% against a basket of currencies used by U.S. trade partners in the last three months. The majority of bitcoin trades against USD, making a weaker dollar better for bitcoin.
“We are seeing the dollar put in a top, inflation easing, interest rate hikes slowing down – all pointing to markets getting more risk-on over the next few months,” Vijay Ayyar, vice president of corporate development and international at crypto exchange Luno, told CNBC.
‘Whales’ buying BTC
Larger purchasers of digital coins known as “whales” may be leading the latest rally in bitcoin, according to Kaiko.
The crypto data firm said in a series of tweets Monday that trade sizes had climbed from an average of $700 on Jan. 8 to $1,100 today on the crypto exchange Binance, indicating renewed confidence in the market by whales.
Whales are investors who’ve hoarded large piles of bitcoin. Some are individuals, like MicroStrategy CEO Michael Saylor and Silicon Valley investor Tim Draper. Others are entities such as market makers, which act as the middlemen in trades between buyers and sellers.
Skeptics of digital currencies say this makes the market prone to manipulation by a select few investors with large piles of tokens. The wealthiest 97 bitcoin wallet addresses account for 14.15% of the total supply, according to fintech firm River Financial.
In December, Carol Alexander, a professor at the University of Sussex, told CNBC that bitcoin could see a “managed bull market” in 2023 in which bitcoin travels north of $30,000 in the first quarter, and to $50,000 in the second half. Her reasoning was that with trading volumes evaporating, and the level of fear in the market extremely high, whales would then step in to prop up the market.
Bitcoin mining difficulty rising
There are other factors at play, as well.
Several bitcoin miners have been flushed out by the drop in prices. Bitcoin miners, who use power-intensive machines to verify transactions and mint new tokens, have been squeezed by the slump in prices and rising energy costs.
That’s historically a good sign for bitcoin, according to Ayyar.
These actors accumulate massive piles of digital currency, making them some of the biggest sellers in the market. With miners offloading their holdings to pay off debts, that removes much of the remaining selling pressure on bitcoin.
More recently, however, bitcoin’s network “difficulty” has been increasing, meaning more computing power is being deployed to unleash new tokens into circulation.
Mining difficulty reached a record 37.6 trillion on Sunday, according to BTC.com data, meaning that, on average, it would take 37.6 trillion hashes, or attempts, to find a valid bitcoin block and add it to the blockchain.
“Bitcoin mining difficulty is a measure of how difficult it is to create the next block of transactions,” said Marcus Sotiriou, market analyst at digital asset broker GlobalBlock, told CNBC.
“Bitcoin mining difficulty fell 3.6% before the last update, after a winter storm led some miners to shut down. However, now miners appear to have come back online, with new and more efficient machines.”
2024 ‘halving’
Meanwhile, events further down the crypto calendar could give traders cause for some New Year cheer. It is still a year away, but the so-called bitcoin “halving” is an event that often leads to excitement for crypto investors.
The halving, where bitcoin rewards to miners are cut in half, is viewed by some investors as positive for bitcoin’s price as it squeezes supply.
“There are signs this could be the beginning of a new cycle with Bitcoin, as it typically does around 15-18 months before halving,” Ayyar told CNBC.
The next halving is slated to happen sometime between March and May of 2024.
However, Ayyar cautioned, “At this point, we’re in overbought territory with Bitcoin and hence could definitely see a dip.” Prices could go for a dip if bitcoin closes below $18,000 in the next few days, he added.
Oracle CEO Clay Magouyrk appears on a media tour of the Stargate AI data center in Abilene, Texas, on Sept. 23, 2025.
Kyle Grillot | Bloomberg | Getty Images
Oracle on Friday pushed back against a report that said the company will complete data centers for OpenAI, one of its major customers, in 2028, rather than 2027.
The delay is due to a shortage of labor and materials, according to the Friday report from Bloomberg, which cited unnamed people. Oracle shares fell to a session low of $185.98, down 6.5% from Thursday’s close.
“Site selection and delivery timelines were established in close coordination with OpenAI following execution of the agreement and were jointly agreed,” an Oracle spokesperson said in an email to CNBC. “There have been no delays to any sites required to meet our contractual commitments, and all milestones remain on track.”
The Oracle spokesperson did not specify a timeline for turning on cloud computing infrastructure for OpenAI. In September, OpenAI said it had a partnership with Oracle worth more than $300 billion over the next five years.
“We have a good relationship with OpenAI,” Clay Magouyrk, one of Oracle’s two newly appointed CEOs, said at an October analyst meeting.
Doing business with OpenAI is relatively new to 48-year-old Oracle. Historically, Oracle grew through sales of its database software and business applications. Its cloud infrastructure business now contributes over one-fourth of revenue, although Oracle remains a smaller hyperscaler than Amazon, Microsoft and Google.
OpenAI has also made commitments to other companies as it looks to meet expected capacity needs.
In September, Nvidia said it had signed a letter of intent with OpenAI to deploy at least 10 gigawatts of Nvidia equipment for the San Francisco artificial intelligence startup. The first phase of that project is expected in the second half of 2026.
Nvidia and OpenAI said in a September statement that they “look forward to finalizing the details of this new phase of strategic partnership in the coming weeks.”
But no announcement has come yet.
In a November filing, Nvidia said “there is no assurance that we will enter into definitive agreements with respect to the OpenAI opportunity.”
OpenAI has historically relied on Nvidia graphics processing units to operate ChatGPT and other products, and now it’s also looking at designing custom chips in a collaboration with Broadcom.
On Thursday, Broadcom CEO Hock Tan laid out a timeline for the OpenAI work, which was announced in October. Broadcom and OpenAI said they had signed a term sheet.
“It’s more like 2027, 2028, 2029, 10 gigawatts, that was the OpenAI discussion,” Tan said on Broadcom’s earnings call. “And that’s, I call it, an agreement, an alignment of where we’re headed with respect to a very respected and valued customer, OpenAI. But we do not expect much in 2026.”
OpenAI declined to comment.
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