Jan 17 (Reuters) – Bitcoin is charging into 2023, sweeping the cryptocurrency market off the ground and electrifying a new meme coin.
The No. 1 cryptocurrency gained 26% in January, jumping 22% in the past week alone to climb above the $20,000 level, putting it on course for its best month since October 2021 – just before the Great Crypto Crash.
According to CoinGecko, Ether has also surged 29% this year, helping push the total global cryptocurrency market cap above $1 trillion.
“After a difficult year for cryptos last year, we’re seeing a form of mean reversion,” said Bespoke Investment Group analyst Jake Gordon, referring to the theory that asset prices are returning to long-term averages.
Investors betting on a rosier macroeconomic picture led to a jump in risky assets, researchers said.
Few cryptocurrency tokens have benefited from bonk, which was launched on the Solana blockchain in late December and has grown 5,000% by early January. Although up 910% since the beginning of the year, it has fallen back since then.
It’s the latest entrant in the hyper-volatile world of meme coins, cryptocurrencies inspired by online memes and jokes, and is modeled after the same smiling Shiba Inu dog as dogecoin — himself made famous by Elon Musk’s tweets.
Bonk is a puppy.
Even at its peak, it was only worth 0.000004873759 with a market cap of about $205 million.
Other meme tokens are also on the rise, 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 rise.”
Nevertheless, some market players pointed to the relatively cheapness of these tokens – worth about eight cents a doge – as a reason why speculators were willing to bet on them.
“Meme coins belong to cryptocurrency, it’s part of the culture,” said Martin Leinweber, digital asset 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.”
RULES ABOUT THE DEATH OF THE LEFT HAVE BEEN DISPUTED
Bonk is a meme coin with a mission. It was created in part to support the Solana blockchain, which saw funds and users flee after cryptocurrency exchange FTX filed for bankruptcy in November and its native Solana token fell more than 37%.
The Solana token has really taken off now that bonk has gained traction: up 131% in 2023, the biggest gain among major cryptocurrencies.
“Rumors of Solana’s death appear to be greatly exaggerated,” said Tom Dunleavy, senior research analyst at data firm Messari. “While the recent price rally appears to be driven by speculation, the underlying ecosystem remains quite strong.”
THE CRYPTO REVERSAL IS ALREADY TO STOP
Some researchers have chalked up the cryptocurrency’s gains to optimism that inflation has peaked, reducing the need for tighter central bank policy.
“Bitcoin and cryptocurrency tend to pre-empt everything, so we’ve seen a lot of relative strength in this asset class lately,” Wave Financial’s Borsai said.
There is definitely an increase in activity.
According to Blockchain.com, the dollar value of bitcoin trading volume on major exchanges rose to $151 million over the 7-day period, the highest in nearly two months.
According to Chainalysis data, total bitcoin flows, representing all uses including trading and payments, have 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, noting that trading volumes remained low and the macroeconomic environment was uncertain.
“Despite the recent strength we saw overnight, it’s too early to declare a definitive turnaround for the crypto market,” said Aaron Kaplan, co-founder of Prometheum, a digital asset securities trading platform.
“If interest rate hikes are lower than the market expects, then riskier assets will benefit and crypto prices will likely continue their uptrend, but uncertainty is too great right now.”
Reporting by Medha Singh and Lisa Mattackal in Bengaluru; Edited by Pravin Char
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