Bitcoin Sparks Crypto Market Revival in 2023
Bitcoin, the number one cryptocurrency, has come charging back in 2023, lifting the entire crypto market off the floor and leaving investors electrified. Bitcoin gained 26% in January, and in the past week alone, it surged 22%. Its value broke above $20,000, setting it up for its best month since October 2021, just before the Big Crypto Crash.
Ether has also made gains, rising 29% this year, contributing to the overall global cryptocurrency market’s value, which has now exceeded $1 trillion according to CoinGecko. Market analysts attribute the shift to the mean reversion theory, where asset prices tend to return to long-term averages after a rough year, as was the case for cryptos in 2022.
Investors’ optimistic outlook on macroeconomic factors has also led to an increase in riskier assets across the board, with a few crypto tokens benefiting more than others. Bonk, a new meme coin launched on the Solana blockchain in December, has rocketed 5,000% by early January, and though it has since fallen back, it remains up 910% since the start of the year.
While other meme tokens like Dogecoin and Shiba Inu are also up, with gains of 19% and 27% respectively, market players warn investors to exercise caution. “Investors need to be especially cautious when it comes to coins like Doge, Shiba Inu, and Bonk,” says Les Borsai, co-founder of digital assets services firm Wave Financial. “They fall just as hard as they surge.”
Despite the warning, some market players believe that the relative cheapness of meme tokens like Dogecoin, which is worth around eight cents, and the community behind them have made them more attractive to speculators. “Meme coins belong to crypto; it’s part of the culture,” says Martin Leinweber, digital assets product specialist at MarketVector Indexes. “It just takes a few lines of code to create a meme token, and if you have a community for it, people love that.”
Bonk, in particular, has a mission to support the Solana blockchain, which has experienced an exodus of funds and users since FTX crypto exchange filed for bankruptcy in November. Its native Solana token has gained traction, with the token’s value up 131% in 2023, making it the biggest gainer among major cryptocurrencies.
Researchers attribute the recent surge in crypto gains to optimism that inflation has peaked, thus reducing the need for tighter central bank policy. “Bitcoin and crypto tend to front-run everything, which is why we’ve seen notable relative strength in this asset class of late,” says Wave Financial’s Les Borsai. However, market watchers caution against early celebrations, noting that trading volumes remain low, and the macroeconomic environment remains uncertain.
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