Bitcoin reached a two-month peak, extending its cautious ascent in January as geopolitical uncertainties enhanced its appeal.

During early Asian trading on Wednesday, Bitcoin climbed as much as 2.4% to $96,348 in Singapore, marking its highest intraday level since November 16. Ethereum, the second-largest token, surged up to 5.1%.

Bitcoin concluded 2025 on a sluggish note, registering a full-year decline of over 6% within a narrow trading band. However, January has revealed potential breakout signals for the token, with traders speculating it could gain an edge in the competition among asset classes.

"Medium-term, I believe we might witness investors allocating more capital to Bitcoin based on the narrative of it catching up to gold, while other risk assets are also performing remarkably well," stated Justin d'Anethan, Head of Research at Arctic Digital.

Vincent Liu, Chief Investment Officer at Kronos Research, highlighted another factor: a short squeeze occurring in Bitcoin's derivatives market. Data from CoinGlass indicates that approximately $270 million worth of Bitcoin short positions were liquidated over the past 24 hours. Across the broader cryptocurrency market, around $600 million in short positions were closed.

Overall, traders perceive the current macroeconomic environment as favorable for Bitcoin, according to Joshua Lim, Co-Head of Global Markets at FalconX.