The year 2023 has started on the right foot, since Bitcoin (BTC) has shot up 40% in January. However, the good news is not limited to Bitcoin, as this price surge has caused a ripple effect throughout the digital asset space. Mining revenue increased by $2.266 billion, and cryptocurrency-related stocks doubled on average. Despite this good news, venture capital investments are down 23% from the previous month.
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Bitcoin gains momentum in the first quarter of 2023
Bitcoin posted its best monthly performance since October 2021, gaining nearly 40% in January. After benefiting from a consumer price index that showed inflation slowing in December 2022, cryptocurrency and stock prices began to cool as retail data missed expectations and earnings declined. When the BTC 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 inflation still high. BTC saw little volatility around the $23,000 level, suggesting that the news was already priced in.
As BTC gained bullish momentum in January, centralized exchange deposits and withdrawals normalized. The largest monthly coin outflow in history occurred after the FTX crash 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 cryptocurrency market. BTC’s bull month broke through its 50, 100, and 200-day moving averages for the first time in over a year, with investor cohorts returning to previously wiped out profitability in 2022.
DeFi TVL climbs to $10 billion despite persistent fears and hacks
Several altcoins, including Gala (GALA), Aptos (APT), Threshold (T), Decentraland’s MANA, and Solana (SOL), saw over 100% monthly growth in early 2023 as the price of Bitcoin began to rise at early 2023. This was caused by extreme dominance of negative sentiment and oversaturation of short positions in late 2022. However, Solana-based protocol Friktion still announced a halt to deposits due to the “tough market for DeFi in the coming months”, suggesting that a further recession may be in the offing in the near future.
Simultaneously, several developments in a darker world of exploits and hacks continued, following the path of 2022. Specifically, the Avraham Eisenberg saga is unfolding as Mango Markets sues the hacker for $47 million in damages following his $47 million attack. 117 million in October 2022. Lately there have been several incidents of stolen funds moving in the sector.
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