Welcome back to Distributed Ledger. This is Frances Yue, crypto reporter at MarketWatch. Bitcoin has had a stellar start this year, with an almost 40% rise so far, even though crypto lender Genesis filed for bankruptcy last week, only months after digital asset exchange FTX imploded in November. In this installment, I’ll break down what’s driving the largest cryptocurrency’s rally.
Find me on Twitter at @FrancesYue_ to share any thoughts on crypto, this newsletter, or your personal stories with digital assets. Why the rally？ It is not only crypto – most markets tend to perform well in January, as fund managers rush to deploy money at the start of a year, according to Ivan Ivanchenko, managing partner at Phinom Digital. In fact, most risk assets rose so far this year, with the tech-heavy Nasdaq Composite logging a 8.8% gain, according to FactSet data. Meanwhile, bitcoin was heavily shorted in November and December after FTX’s collapse. As the crypto’s price rose unexpectedly in January, some short sellers were forced to close their positions and buy bitcoin, pushing the crypto’s price even higher. Bitcoin’s rise also comes as investors’ confidence picked up, noted Luuk Strijers, chief commercial officer at crypto derivatives exchange Deribit. After FTX’s implosion in November, the number of open contracts for bitcoin futures and options on Deribit reached the highest level in history, indicating a h …