• Total assets under management (AUM) for digital asset investment products surged 36.8% to $19.7 billion in January, its highest level since May 2022.
• The crypto market revival was driven by liquidated short positions and a favorable macro environment, reflected in the most recent CPI announcement.
• Despite the market’s revival, the situation related to Grayscale’s Bitcoin Trust (GBTC) remains delicate, as the GBTC discount has only slightly narrowed in January.

The cryptocurrency market experienced a revival in January, with total assets under management (AUM) for digital asset investment products surging a whopping 36.8% to $19.7 billion, its highest level since May 2022. According to CryptoCompare, a crypto intelligence firm, the revival was driven by liquidated short positions and a favorable macro environment, reflected in the most recent CPI announcement, which saw Bitcoin’s price reach $23,000; its highest level since August 2022.

The strong performance of the cryptocurrency market in January is a welcomed sign for investors, who had to endure a difficult year in 2022. It is widely agreed amongst analysts that the main trigger of 2022’s risk asset and crypto bear markets was a surprisingly aggressive hawkish shift in the policy stance of the US Federal Reserve and other major central banks in order to clamp down on a stronger-than-expected surge in global price pressures.

Despite the January revival in crypto market sentiment that has also resulted in a rebound on crypto investment product AUM, CryptoCompare noted that the situation relating to Grayscale’s Bitcoin Trust (GBTC) remains delicate. While GBTC remains the dominant Bitcoin investment trust product in terms of AUM, with a market share of 69.3%, CryptoCompare noted that “the discount associated with Grayscale’s GBTC Trust has only slightly narrowed” in January. The GBTC discount refers to the percentage that GBTC shares are trading below their net asset value. As of the 31st of January, the GBTC discount was a staggering 42.29%, only slightly lower than its 45.2% discount in December 2022.

Overall, the revival of the cryptocurrency market in January is a welcome sign for investors, although there is still some uncertainty regarding the situation related to Grayscale’s Bitcoin Trust (GBTC). It remains to be seen whether the discount associated with GBTC will continue to decline or if it will remain high.