Jan 17 (Reuters) – Bitcoin is in charge in 2023, dragging the crypto market to the ground and electrifying bonk, a new meme coin.
The No. 1 cryptocurrency posted a 26% gain in January, surging 22% in the past week alone, climbing back above the $20,000 level and setting itself on course for its best month since October 2021 – just before the Big Crypto Crash.
Ether has also risen 29% this year, helping to push the value of the overall global cryptocurrency market above $1 trillion, according to CoinGecko.
“After a tough year last year for cryptos, we are seeing some form of mean reversion,” said Jake Gordon, an analyst at Bespoke Investment Group, referring to the theory of asset price reversion to means at long term.
The researchers said investors’ bets on a rosier macroeconomic picture led to an increase in riskier assets across the board.
Few crypto tokens have profited more than bonk, which launched in late December on the Solana blockchain and had soared 5,000% by early January. It has since retreated, but remains up 910% year-to-date.
It’s the latest addition to the hyper-volatile world of meme coins, meme-inspired cryptocurrencies and online jokes, and is inspired by the same smiling dog Shiba Inu as dogecoin – which itself has been catapulted to fame by Elon Musk’s tweets.
Bonk is a puppy, however.
Even at its peak, it was only 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 buyers beware.
“Investors should be especially careful 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 arise.”
Nonetheless, some market participants pointed to the relative low cost of these tokens – the doge is worth around eight cents – as the reason why speculators were willing to bet on them.
“Meme coins are part of the crypto, it’s part of the culture,” said Martin Leinweber, digital asset product specialist at MarketVector Indexes. “It only takes a few lines of code to create a meme token and if you have a community for it, people love it.”
EXAGGERATED SOL DEATH RUMORS
Bonk is a meme piece with a mission. It was created, in part, 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 has plummeted. more than 37%.
The Solana token has indeed surged as bonk has gained ground: it has risen 131% in 2023, the biggest gainer among major cryptocurrencies.
“Rumors of Solana’s death appear to have been greatly exaggerated,” said Tom Dunleavy, senior research analyst at data firm Messari. “Despite recent price appreciation seemingly driven by speculation, the underlying ecosystem remains quite robust.”
TOO EARLY TO ANNOUNCE A CRYPTO INVERSION
Some scholars have attributed the crypto gains to optimism that inflation has peaked, reducing the need for tighter central bank policy.
“Bitcoin and crypto tend to dominate everything, which is why we have recently seen notable relative strength in this asset class,” said Borsai of Wave Financial.
There has certainly been an increase in activity.
The dollar value of bitcoin trading volumes on major exchanges over a 7-day period jumped to $151 million, the highest in nearly two months, according to data from Blockchain.com.
Total bitcoin flows – representing all uses, including commerce and payments – increased by an average of 13,130 bitcoins over the past 7 days, the largest increase in 64 days, according to data from Chainalysis.
However, market watchers cautioned against celebrating too early, noting that trading volumes remained low and the macro environment was uncertain.
“It is too early to declare a definitive reversal in the crypto market despite the recent strength we have seen recently,” said Aaron Kaplan, co-founder of Prometheum, a digital asset securities trading platform.
“If interest rate hikes are lower than market expectations, risky assets will benefit and crypto prices will likely continue their upward trend, but there is just too much uncertainty right now. “
Reporting by Medha Singh and Lisa Mattackal in Bengaluru; Assembly Pravin Char
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