Led by Bitcoin, Blockchain Industry Starts 2023 Strong: Report
2023 is off to a great start, with Bitcoin (BTC) rocketing 40% in January. However, the good news is not relegated to just Bitcoin, as this price increase has sent ripples across the entire crypto market. Mining revenues increased by $22.66 million in January, and crypto-related stocks doubled on average. Despite this good news, venture capital investment is down 23% from last month.
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Bitcoin gains momentum in the 1st quarter of 2023
Bitcoin posted its best monthly price performance since October 2021, gaining nearly 40% in January. After benefiting from a consumer price index print that showed inflation slowing in December 2022, crypto and equity prices began to cool as retail sales data missed expectations and earnings eased. As BTC’s price hit a multi-month high of $23,920 on January 29, all eyes turned to the February 1 meeting of the Federal Open Market Committee, which raised its benchmark interest rate by 25 basis points, citing easing but still high inflation. BTC saw little volatility around the $23,000 level, suggesting the news was priced in.
As BTC gained bullish momentum in January, centralized inflows and outflows normalized. The largest monthly coin outflow in history occurred after the FTX collapse in November 2022, reaching 200,000 BTC/month across all exchanges. Net flows are now closer to neutral, with a reduction in the high outflow trend signaling that investors are returning to the crypto market. BTC’s bullish month broke 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 in early 2023 as Bitcoin’s price began to rise in early 2023. This was caused by the extreme dominance of negative sentiment and the oversaturation of short positions by the end of 2022. However, the Solana-based protocol Friktion still announced the suspension of deposits due to “the tough market for DeFi in the coming months,” suggesting that further recession may occur in the near future.
At the same time, several events continued in a darker world of exploits and hacks, following the road to 2022. Avraham Eisenberg’s saga is unfolding as Mango Markets sued the hacker for $47 million in compensation following his $117 million attack in October 2022. There have been several cases of stolen funds that have moved around the industry recently.
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Demelza Hays, Ph.D., is the Director of Research at Cointelegraph. Hays has assembled a team of subject matter experts from finance, economics and technology to bring the premier source of industry reports and insightful analysis to the market. The team uses APIs from various sources to provide accurate, useful information and analysis.
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The opinions expressed in this article are for general information purposes only and are not intended to provide specific advice or recommendations for any individual or about any specific security or investment product.
