(Bloomberg) -- Bitcoin has bolted out of January’s starting gates with a climb of more than 26%, turning up the heat on bears who anticipated more challenges for riskier investments after sharp selloffs in 2022.

The token’s advance so far is the best for the opening month of a year since a 31% rally in 2020 before the pandemic hit. The surge has helped to lift the overall value of digital assets past $1 trillion, a level that gave way in November when the FTX exchange imploded, CoinGecko data shows.

The largest cryptocurrency rose as much as 2.5% on Monday and was trading at $20,860 as of 12:18 p.m. in London, down slightly for the session along with tokens like Ether, Avalanche and Algorand. 

The crypto climb is partly a bet on an end to punishing interest-rate hikes, a prospect that’s also boosted the likes of stocks, bonds and gold. Even so, investors are wondering if all these assets have moved too far, too fast given that central banks like the Federal Reserve are pledging to keep policy rates elevated until still-high inflation is vanquished.

While plenty of uncertainty hangs over digital assets, including whether a short squeeze is driving up prices and will peter out, “FOMO is likely to play a role in how the market evolves from here,” Noelle Acheson wrote in her “Crypto Is Macro Now” newsletter, using the acronym for “fear of missing out.”

A jump in the average size of trades indicates “whales” are driving the rally, researcher Kaiko said on Twitter, referring to large crypto holders. Trade sizes have increased to $1,100 from $700 for the Bitcoin-US dollar pair on the Binance exchange since Jan. 8, Kaiko said. 

At the same time, market depth — a measure of how one big trade could impact the price of Bitcoin — lingers near the lowest level since since FTX went bankrupt, according to Kaiko. 

The crypto industry continues to brace for further fallout from the bankruptcy of FTX and ensuing fraud charges against co-founder Sam Bankman-Fried. Crypto brokerage Genesis and its parent firm Digital Currency Group are seeking to resolve debt woes, a process that could spark market upheavals.

Meanwhile, some technical indicators suggest Bitcoin’s jump is becoming stretched. The token’s 14-day relative-strength index — a measure of momentum — has scaled 90. That’s far above the 70 level viewed as “overbought” and the highest in about two years.

This year’s Bitcoin surge is among the signs that “there’s still a lot of froth in the marketplace” and that “investors continue to ‘act’ in a much less bearish way than they ‘speak,’” Matt Maley, chief market strategist at Miller Tabak + Co., wrote in note on Sunday.

Both Bitcoin and a gauge of the top 100 digital assets sank more than 60% in 2022, a painful year that raised questions about what kind of future they have.

For crypto market prices: CRYP; for top crypto news: TOP CRYPTO.

(Updates prices in third paragraph, Kaiko estimates in sixth.)

©2023 Bloomberg L.P.