While noting that the new year is very much still in its infancy, one can’t help but notice the recent surge across the crypto sector.
Here’s a snapshot of how some notable crypto names have fared so far this year:
Even more eye-watering are the triple-digit gains for liquid-staking tokens such as StakeWise’s SWISE and Lido DAO, which have each gained over 100% each!
And when scouring across global financial markets, crypto’s gains are in stark contrast to how these traditional asset classes have fared since end-2022:
To be sure, even with its recent gains, Bitcoin remains 75% below the all-time high (based on intraday prices) just shy of the US$69k mark that was posted back in November 2021.
Though Bitcoin afficionados may be taking heart from the fact that prices of the world’s oldest crypto have breached their 50-day simple moving average (SMA) once more.
Why are cryptos climbing?
Overall, there has been a risk-on mood sweeping across global financial markets as we entered the new year.
From a macro perspective, investors and traders hope that the worst of the aggressive rate hikes by central bankers worldwide can now be relegated to the history books. Market participants hope that, with a souring global economic outlook, these central banks will pivot their policies towards a more supportive stance.
This pivot may ultimately inject liquidity back into financial markets this year, and we know from history that cryptos thrive on this added liquidity.
Are cryptos woes truly over?
While green shoots of optimism are sprouting out across the macro environment, the crypto world may take a longer time to fully recover from 2022’s woes, featuring some high-profile implosions, from the Terra ecosystem to the FTX empire.
And the effects are still reverberating into 2023:
Though to be fair to HODL-ers, there are bright fundamental sparks on the horizon:
Overall, there appears to be risks both to the upside and the downside for crypto, which could translate into a slippery and treacherous rod ahead for traders.
Yet with each precarious step upwards, crypto may then be able to entice sufficient mass of investors and traders to return from the sidelines and take such risky bets once more, even while the brutal scars from 2022’s meltdown remain fresh on the market’s collective mind.