January Effect? Bitcoin, Crypto Are Cautiously in the Green

An early, solid 2023 showing for markets has a slim shot of translating to the rest of the year, analysts said


kitti Suwanekkasit/Shutterstock.com modified by Blockworks


As both stock and crypto traders look to recuperate 2022 losses, January is already showing cautiously optimistic signs that the new year may be different. 

Crypto tokens and equities inched modestly into the green toward the end of Wednesday’s stock trading session, marginally underperforming results on Tuesday — the first TradFi trading day of 2023. 

The January indicator, the idea that the rest of the year will be determined by gains or losses during the first month, certainly proved true in 2022, when the S&P 500 closed the month 5.3% lower and went on to end the year almost 20% in the red, capping off Wall Street’s worst year since 2008. 

After increased selling from tax-loss harvesting in December, cryptos and equities have kicked off 2023 with a tailwind, but the headwinds that pushed prices lower in 2022 – Federal Reserve policy, inflation, corporate earnings – haven’t gone anywhere. 

Traders hoping for positive returns this month, followed by a lucrative year, should be cautious, according to Nicholas Colas, co-founder of DataTrek Research. 

“We would not be surprised to see US equities begin 2023 on an up note, even after [Tuesday’s] selloff, but caution that ‘so goes January, so goes the year’ may not tell us much about the cadence of returns over the next 12 months,” Colas said. 

Digital assets are still showing tight correlation to securities and macroeconomic indicators, analysts said, advising traders to tread carefully. 

“We concluded that although price performance [in 2022] was dismal, ETH’s decline was in-line with declines from large blue chip tech companies (TSLA, META),” Tom Nath, chief operating officer at BitOoda, wrote in a Wednesday note. “In 2023, with a macro backdrop of higher rates and a potential recession, the US Dollar is likely to continue as the risk-off asset of choice.” 

With continued correlation to traditional assets and macroeconomic uncertainty, 2023 is probably not going to be the year for crypto’s narrative as a store of value to blossom, Nath added, but the technical thesis shows potential. 

“[In 2022,] bitcoin’s correlation with the S&P 500 hit both an all time high and dropped to 15-month lows,” research analysts from Kaiko wrote in a note. “The lows were reached during FTX’s collapse, while the highs emerged in the final week of December. This is the best evidence yet that macro is back.”

Interest rate hikes around the world have helped create the least friendly macro environment for risk assets in years, according to the Kaiko analysts, which has played out via a dramatic drawdown for crypto, equities and most everything in between.

Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the On the Margin newsletter.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.


Upcoming Events

Salt Lake City, UT

MON - TUES, OCT. 7 - 8, 2024

Blockworks and Bankless in collaboration with buidlbox are excited to announce the second installment of the Permissionless Hackathon – taking place October 7-8 in Salt Lake City, Utah. We’ve partnered with buidlbox to bring together the brightest minds in crypto for […]

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

Unlocked by Template.png


With the spot ETH ETF approval, the institutions are coming. stETH - given its dominance in marketshare, existing liquid market structures, and highly desirable properties - is poised for institutions.


NVIDIA’s historic run is only deepening the divide between mega-cap tech stocks and the rest of the market.


EIP-7702 was quickly adopted for the next Ethereum upgrade, but developers haven’t quite locked it down


Marathon Digital’s latest heating project in Finland part of broader vision to “drive the advancement of the digital asset compute industry,” CEO says


MicroStrategy announced that it bought nearly 12,000 more bitcoin from April to late June


Unpacking Trump memecoins and the Kraken/CertiK situation