At the beginning of each year, trading activity on Binance increases because market behavior changes with the "beginning of the year" both financially and psychologically. Many traders and funds reopen their plans and risk limits after the end of December, leading to rebalancing, buying, and selling to organize portfolios. Additionally, new money enters at the start of the year (bonuses, new savings, annual allocations), increasing the number of trades even before a clear direction emerges. With the start of January, new narratives appear in crypto: plans for a new year, "trend" sectors, and news that rekindles interest. This is why the market suddenly seems "more alive," but that doesn't mean profit opportunities have become easier; it often just means that the number of participants has returned and the flow of money has increased.
There is a known reason in financial markets called the 'January effect': some people sell in December for tax reasons and then return to buy in January, leading to increased activity. In crypto, there is an important angle: in the United States, cryptocurrencies are often treated as 'assets/properties' for tax purposes, rather than as stocks or traditional currencies, which makes buying and selling behavior around year-end different. Additionally, the 'wash sale' rules that prevent selling and then quickly buying back are usually associated with securities, so some participants treat crypto as if it is less restricted in re-entering after realizing a loss—keeping in mind that rules and regulations are constantly changing and that details vary by situation. The result: part of January's volume may just be 'returning entries' after year-end selling, rather than a new conviction that the market will rise.
The reason that most people do not notice is liquidity. In December, liquidity decreases due to holidays, which widens price spreads and makes it difficult to execute large trades, leading to reduced activity or more randomness. When traders and market makers return in January, liquidity improves and execution becomes easier, so volume jumps as if it is 'confidence,' but sometimes it is just 'an improvement in the market's ability to execute trades.' Binance also indicates that holiday periods can mean weaker liquidity and higher volatility, and that reading activity needs context. To properly understand January's volume, do not look at volume alone: tie it to open interest (OI) (are new positions being opened or closed?) and flow direction (is buying dominant or selling?). The idea that 99% overlook: volume is a number that does not tell you who pressed the button; it only becomes useful if you know whether it is real accumulation or rotation and noise.
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