Led by Bitcoin, blockchain industry starts 2023 off strong: Report
With a Bitcoin rally to begin the year, the crypto space is looking up. However, not every sector has reversed its downward trajectory.
2023 is off to a great start, with Bitcoin (BTC) rocketing up 40% in January. The good news is not relegated to just Bitcoin, however, as this price increase has sent ripple effects across the cryptoverse. Mining revenue jumped $22.66 million in January, and crypto-related stocks doubled on average. Despite this good news, venture capital investments are down 23% from the previous month.
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Bitcoin gaining momentum in Q1 of 2023
Bitcoin posted its best monthly price performance since October 2021, gaining almost 40% in January. After benefiting from a Consumer Price Index print that showed inflation slowing in December 2022, crypto and stock prices began to cool as retail data missed expectations and earnings diminished. As BTC’s price hit a multi-month high of $23,920 on Jan. 29, all eyes turned to the Feb. 1 meeting of the Federal Open Market Committee, which raised its benchmark interest rate by 25 basis points, citing easing but still elevated inflation. BTC saw little volatility around the $23,000 level, suggesting the news was priced in.
As BTC gained bullish momentum in January, centralized exchange inflows and outflows normalized. The largest monthly outflow of coins in history occurred after the FTX collapse in November 2022, hitting 200,000 BTC/month across all exchanges. The net flows are now closer to neutral, with a reduction in the high outflow trend signaling investors are returning to the crypto market. BTC’s bullish month blitzed through its 50-, 100- and 200-day moving averages for the first time in over a year, with investor cohorts returning to profitability previously wiped out in 2022.
DeFi TVL up $10 billion despite persistent fears and hacks
Several altcoins, including Gala (GALA), Aptos (APT), Threshold (T), Decentraland’s MANA and Solana (SOL), experienced 100%+ monthly growth at the beginning of 2023 as Bitcoin’s price started to rise at the beginning of 2023. This was caused by the extreme dominance of negative sentiment and the over-saturation of short positions by the end of 2022. However, Solana-based protocol Friktion still announced the halting of deposits due to the “tough market for DeFi in the coming months,” suggesting that further recession may occur in the near future.
Simultaneously, several events in a darker world of exploits and hacks continued, following the pathway of 2022. Namely, Avraham Eisenberg’s saga is unfolding as Mango Markets sued the hacker for $47-million compensation following his $117-million attack in October 2022. There have been several incidences of stolen funds moving around in the industry lately.
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Demelza Hays, Ph.D., is the director of research at Cointelegraph. Hays has compiled a team of subject matter experts from finance, economics and technology to bring the premier source for industry reports and insightful analysis to the market. The team utilizes APIs from various sources to provide accurate, useful information and analyses.
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