Crypto Tops Stocks, Gold in New Year Gain Shaded by Skepticism

[ad_1]

(Bloomberg) – A cryptocurrency sector battered by last year’s turmoil is showing signs of life in early 2023, posting bigger gains than other major asset classes, including stocks, bonds and gold.

Bloomberg’s Most Read

The MVIS CryptoCompare Digital Assets 100 Index of major tokens is up around 6% so far this month, outpacing advances of around 2% in global stocks, 1% in global bonds and 3% in the gold, according to data compiled by Bloomberg.

Global markets are rejoicing at the possibility that central banks are about to call the clock on rapid interest rate hikes as inflation declines from very high levels. Some of this tentative relief has spilled over to crypto, even as the threat of further bankruptcies looms over the industry following the collapse of FTX.

There is a faint heartbeat in patients who have not died, said Tony Sycamore, market analyst at IG Australia, referring to Bitcoin’s 4% rise so far in January. The selling momentum appears to be exhausted and there is a better macro environment, but the token needs to move at key technical levels such as the 200-day moving average to garner greater investor interest, he said.

Some of the sharpest crypto gains are outside of the larger Bitcoin token. Second-tier Ether is up 9% so far this month. Solana, a token that lost almost all of its value last year due to a connection to deposed FTX founder Sam Bankman-Fried, added over 60% in early January.

An upgrade to the Ethereum blockchain, a key crypto trading highway, is also generating optimism. The upgrade, called Shanghai, could come to fruition in March. This will allow investors to withdraw the Ether they have locked away to help run the network. This latter process is known as staking and yields rewards.

The story continues

Staking Tokens

Some crypto protocols seek to provide easier and more flexible access to staking rewards, and coins tied to them have exploded. Examples include StakeWises SWISE, Lido DAO, and Rocket Pools RPL, which rose 113%, 107%, and 21% respectively in January, according to data from CoinGecko.

Bitcoin rose 1.7% on Monday and traded at $17,200 at 7:48 a.m. London, a three-week high. Solana added around 19% and Cardano 12%.

Bitcoin and the gauge of the top 100 digital assets fell more than 60% in 2022, hit by a sharp monetary policy tightening and a series of blowouts culminating in the collapse of the FTX exchange, which owes billions dollars to its customers.

Trading volumes crashed and volatility declined as investors fled, underscoring lingering concerns about the risk of further bankruptcies amid the contagion of suspected fraud at FTX.

For crypto market prices: CRYP; for the best crypto news: TOP CRYPTO.

–With help from Sunil Jagtiani.

Bloomberg Businessweek’s Most Read

2023 Bloomberg LP

[ad_2]