Jan 17 (Reuters) – Bitcoin is charging in 2023, dragging the crypto market out of the ground and electrifying bonk, a new meme coin.
The #1 cryptocurrency has posted a 26% gain in January, jumping 22% in the last week alone, breaching the $20,000 level and heading towards its best month since October 2021, just before the Big Crypto Crash.
Ether is also up 29% this year, helping push the value of the global cryptocurrency market above $1 trillion, according to CoinGecko.
“After a difficult year for cryptocurrencies last year, we are seeing a form of mean reversion,” said Jake Gordon, an analyst at Bespoke Investment Group, referring to the theory that asset prices return to averages at long term.
The researchers said investor bets on a rosier macroeconomic outlook were fueling a jump in riskier assets across the board.
Few crypto tokens have benefited more than bonk, which launched in late December on the Solana blockchain and skyrocketed 5,000% in early January. Since then it has fallen, although it is still up 910% since the beginning of the year.
It’s the latest entrant into the hypervolatile world of meme coins, meme-inspired cryptocurrencies, and online jokes, and it’s modeled after the same grinning Shiba Inu dog as dogecoin, which itself was catapulted to fame by Elon Musk’s tweets. .
However, Bonk is a puppy.
Even at its peak, it was worth just $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 cautious 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 get up.”
However, some market players pointed to the relative low cost of these tokens (the dogo is about eight cents) as a reason why speculators were willing to bet on them.
“Meme coins belong to cryptocurrency, they are 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.”
RUMORS OF DEATH OF SUN EXAGGERATED
Bonk is a meme coin with a mission. It was created, in part, to support the Solana blockchain, which has seen an exodus of funds and users since cryptocurrency exchange FTX filed for bankruptcy in November, with its native Solana token falling more than 37%.
The Solana token has now jumped as Bonk has gained traction – it is up 131% in 2023, the biggest gainer among major cryptocurrencies.
“Rumors about Solana’s death appear to have been greatly exaggerated,” said Tom Dunleavy, a senior research analyst at data firm Messari. “Although the recent price appreciation appears to be driven by speculation, the underlying ecosystem remains quite strong.”
TOO EARLY TO CALL A CRYPTO REVERSAL
Some researchers attributed the crypto gains to optimism that inflation had peaked, reducing the need for tighter central bank policy.
“Bitcoin and cryptocurrencies tend to lead all, so we’ve seen notable relative strength in this asset class of late,” said Wave Financial’s Borsai.
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, which account for all uses including trade and payments, have increased by 13,130 bitcoins on average over the past 7 days, the largest increase in 64 days, Chainalysis data showed.
However, market watchers warned against celebrating too soon, noting that trading volumes remained low and the macroeconomic environment uncertain.
“It’s too early to declare a definitive reversal for the crypto market despite the recent strength we’ve seen of late,” said Aaron Kaplan, co-founder of Prometheum, a digital asset stock trading platform.
“If interest rate increases are below what the market expects, then risk assets will benefit and cryptocurrency prices are likely to continue to trend higher, but there is too much uncertainty right now.”
Reporting by Medha Singh and Lisa Mattackal in Bangalore; Edited by Pravin Char
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