Jan. 17 (Reuters) – Bitcoin is shipping in 2023, pulling the cryptocurrency market off the floor and sparking ponk, a new meme currency.
The No. 1 cryptocurrency posted a 26% gain in January, jumping 22% in the past week alone, crossing the $20,000 mark and posting its best month since October 2021 — just before the big altcoin crash.
Ether is up, too, by 29% this year, helping to push the value of the overall global cryptocurrency market past $1 trillion, according to CoinGecko.
“After a rough year from last year for cryptocurrencies, we are seeing a bit of a mean bounce,” said Jake Gordon, an analyst at Bespoke Investment Group, referring to the theory of asset prices returning to long-term averages.
Investors’ bets on a more optimistic macroeconomic picture were driving a jump in riskier assets across the board, the researchers said.
Few crypto-tokens have profited more than bonk, which launched at the end of December on the Solana blockchain and was up 5,000% by early January. It has since eased, though it’s still up 910% year-to-date.
It’s the latest arrival in the wildly volatile world of meme coins, cryptocurrencies inspired by online memes and jokes, and is modeled after the same grinning Shiba Inu dog as dogecoin — itself made famous by Elon Musk’s tweets.
But Bonk is a puppy.
Even at its peak, it was worth only $0.000004873759 with a market capitalization of around $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 need to be especially careful when it comes to coins like Doge, Shiba Inu, and bonk,” said Les Boursay, co-founder of digital asset services firm Wave Financial.
“They fall with the same force as they rise.”
However, some market players have pointed to the relative cheapness of these tokens — Doge is worth about eight cents — as a reason why speculators are 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 make a meme, and if you have a community for it, people will love it.”
Rumors of the death of one person are exaggerated
Bonk is a currency meme with a mission. 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, Solana’s original token has fallen over 37%.
Solana Token has now really jumped as Bonk gains traction: it is up 131% in 2023, the biggest gainer among the major cryptocurrencies.
“Rumors of Solana’s death appear to be greatly exaggerated,” said Tom Dunleavy, senior research analyst at data firm Messari. “Although the recent price hike appears to be driven by speculation, the underlying ecosystem remains very strong.”
Too early to call the reverse of CRYPTO
Some researchers viewed the cryptocurrency’s gains as optimism that inflation has peaked, diminishing the need for tougher central bank policy.
“Bitcoin and cryptocurrencies tend to run everything on top, which is why we’ve seen notable relative strength in this asset class lately,” said Boursay of Wave Financial.
There was definitely an increase in activity.
The value of bitcoin dollar trading volume on major exchanges over a 7-day period jumped to $151 million, the highest level in nearly two months, according to data from Blockchain.com.
Chainalysis data showed that total bitcoin flows — which account for all uses including trading and payments — increased by an average of 13,130 bitcoins in the last 7 days, the largest rise in 64 days.
However, market watchers cautioned against celebrating too soon, noting that volumes remained low and the macroeconomic environment was uncertain.
“It is too early to announce a definitive reversal of 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 increases are lower than what the market expects, risk assets will benefit and cryptocurrency prices are likely to continue their upward trend, but there is a lot of uncertainty right now.”
Additional reporting by Medha Singh and Lisa Matakal in Bengaluru; Editing by Praveen Char
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