Bitcoin reigns supreme in 2023, rocking the crypto market and electrifying Bonk, a new meme coin. The No. 1 cryptocurrency has posted a 26 percent gain in January, is up 22 percent in the past week alone, has surpassed $20,000 (around Rs.16,35,300) again and is on course for its best month since October 2021 – just before the big crypto crash.
ether is also up 29 percent this year, which has helped increase the value of the entire world cryptocurrency a market of over US$1 trillion (approximately Rs. 81,76,700 crore) according to CoinGecko.
“After a tough year for cryptos over the past year, we are seeing some form of mean reversion,” said Jake Gordon, an analyst at Bespoke Investment Group, referring to the theory of asset prices reverting to long-term averages.
Researchers said investor bets on a rosier macroeconomic picture have driven a surge in riskier assets across the board.
Few crypto tokens have benefited more than bonk, which launched on the Solana blockchain in late December and had skyrocketed 5,000 percent by early January. It has since declined but remains up 910 percent year-to-date.
It’s the latest addition to the hyper-volatile world of meme coins, cryptocurrencies inspired by online memes and jokes, and is modeled after the same grinning Shiba Inu dog as Dogecoin – which itself has been catapulted to fame Elon Musk tweets.
Bonk is a puppy though.
Even at its peak, it was worth just $0.000004873759, with a market capitalization of around $205 million (approximately Rs.1,675 billion).
Other meme tokens are also up, with Dogecoin and Shiba Inu up 19 percent and 27 percent, respectively, in 2023.
But buyers beware.
“Investors need to be extra cautious when it comes to coins like Doge, Shiba Inu, and Bonk,” said Les Borsai, co-founder of digital asset services company Wave Financial.
“They fall just as hard as they rise.”
Nonetheless, some market participants pointed to the relative cheapness of these tokens – Doge is worth about eight cents – as a reason speculators were willing to bet on them.
“Meme coins are part of crypto, they are part of 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 when you have a community for it, people love that.”
Rumors of Sol’s death exaggerated
Bonk is a meme coin with a mission. It was created in part to support the Solana blockchain, which has seen a drain of funds and users since crypto exchanges FTX filed for bankruptcy in November and its native Solana token fell over 37 percent.
Solana token has actually skyrocketed now as Bonk has gained traction: it’s up 131 percent in 2023, the biggest gainer among major cryptocurrencies.
“Rumours of Solana’s death appear to have been greatly exaggerated,” said Tom Dunleavy, senior research analyst at data firm Messari. “Although the recent price spike appears to have been fueled by speculation, the underlying ecosystem remains quite strong.”
It’s 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 crypto tends to drive everything, which is why we’ve seen some notable relative strength in this asset class lately,” said Wave Financial’s Borsai.
Activity has certainly increased.
The dollar value of bitcoin trading volume on major exchanges over a 7-day period rose to $151 million (about Rs.1,234 billion), the highest in nearly two months, according to Blockchain.com data.
Total bitcoin flows — representing all uses including trading and payments — have increased by an average of 13,130 bitcoin over the past 7 days, the biggest increase in 64 days, Chainalysis data showed.
However, market watchers cautioned against celebrating too soon as trading volumes remained low and the macro environment uncertain.
“Despite the recent strength we’ve seen, it’s too early to call for a definitive reversal in the crypto market,” said Aaron Kaplan, co-founder of Prometheum, a digital asset trading platform.
“If rate hikes come in below market expectations, risk assets will benefit and crypto prices are likely to continue the uptrend, but there is just too much uncertainty right now.”
© Thomson Reuters 2023
