Jan 17 (Reuters) – Bitcoin is on the charge in 2023, sweeping the crypto market off the floor and electrifying a new meme coin.
The No. 1 cryptocurrency has gained 26% in January, having jumped 22% in the past week, breaking the $20,000 level on its way to its best month since October 2021 – just before the Big Crypto Crash.
Ether is also up 29% this year, according to CoinGecko, helping push the value of the overall global cryptocurrency market above $1 trillion.
“After a rough year last year for crypto, we are seeing a form of mean reversion,” said Jake Gordon, analyst at Bespoke Investment Group, referring to the principle of asset prices averaging long-term averages.
Researchers said investors’ bets on a rosier macroeconomic picture were driving a jump in riskier assets across the board.
Few crypto tokens have gained more than Bonk, which launched on the Solana blockchain in late December and surged 5,000% in early January. It has since fallen back, though remains up 910% since the start of the year.
It’s the latest entrant to the hyper-volatile world of meme coins, cryptocurrencies inspired by online memes and jokes, and modeled after the same smiling Shiba Inu dog as Dogecoin – which Elon Musk tweets to fame by himself. was misled.
Although Bonk is a puppy.
Even at its peak it was worth $0.000004873759 with a market capitalization of around $205 million.
Other meme tokens are also up, with Dogecoin and Shiba Inu up 19% and 27% respectively in 2023.
But buyer beware.
“Investors need to be especially vigilant when it comes to coins like Doge, Shiba Inu and Bonk,” said Les Borsai, co-founder of digital asset services firm Wave Financial.
“They fall as hard as they rise.”
Nonetheless, some market participants pointed to the relative cheapness of these tokens – a dog costs around eight cents – as the reason speculators were so willing to bet on them.
“Meme Coins belong to crypto, it is part of the culture,” said Martin Leinweber, digital asset product specialist at MarketVector Index. “Creating a meme token requires a few lines of code and if you have a community for it, people love it.”
Rumors of Soul’s death exaggerated
Bonk is a meme coin with a mission. It was created partly to support the Solana blockchain, which has seen an exodus of funds and users since crypto exchange FTX filed for bankruptcy in November, and its native Solana token declined by more than 37%. Has come
The Solana coin has now really jumped as Bonk has gained traction: it is up 131% in 2023, the biggest gain among the major cryptocurrencies.
“It appears that rumors of Solana’s death have been greatly exaggerated,” said Tom Dunleavy, senior research analyst at data firm Messari. “Despite the recent price surge that appears to be driven by speculation, the underlying ecosystem remains quite strong.”
Too early to call crypto reversal
Some researchers chalked up crypto gains to optimism that inflation had peaked, reducing the need for tighter central bank policy.
“Bitcoin and crypto move everything back and forth, which is why we’ve seen remarkable relative strength in this asset class,” said Wave Financial’s Borsai.
Activity has definitely increased.
According to data from Blockchain.com, the dollar value of bitcoin trading volume on major exchanges increased to $151 million in a seven-day period, the highest in nearly two months.
Chainalysis data showed that total bitcoin inflows – representing all uses including trading and payments – increased by an average of 13,130 bitcoins over the past 7 days, the largest increase in 64 days.
However, market watchers cautioned against celebrating too soon, trading volumes remained low and the macroeconomic environment remained uncertain.
“It is too early to declare a definitive reversal for the crypto market, despite the recent strength we have seen,” said Aaron Kaplan, co-founder of digital asset securities trading platform Promethium.
“If the interest rate hike is less than the market expects, then risk assets will benefit and crypto prices will continue to rise, but there is a lot of uncertainty right now.”
Reporting by Medha Singh and Lisa Matakkal in Bengaluru; Editing by Pravin Char
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