After going through one of its worst years in its short history in 2022, the cryptocurrencies they closed the first half of 2023 with significant gainswithin the framework of a year crossed by the banking crisis which raised some transitory doubts about the health of the traditional financial system, which in turn stimulated crypto appetite. In recent months, in turn, the market was conditioned by legal actions taken by the United States Securities and Exchange Commission (sec) against two of the largest exchanges in the world.
However, in that framework, Bitcoin (BTC), the most popular cryptocurrency, managed to overcome the US$30,000, for accumulate a up more than 80% so far this year. Furthermore, in this same period, reached its highest level of dominance in more than two years -since April 2021-, its value against the dollar climbed a 68% and his transaction level reached all-time highs.
Between The cryptocurrencies that marked the highest increases during the first semester there are also Solarium (+91.53%), ethereum (+60.1%), Litecoin (+49.2%), XRP (+40%) and Cardano (+15.89%). There were also some that, so far this year, have accumulated slight advances such as BNB (+1.06%), Tether (+0.03%) and USD Coin (+0.02%). Meanwhile, among the top 10, only one fell back, that was Dogecoinwith a 2.4% drop.
“Last year was very complex for the crypto world. Prices plummeted, several emblematic projects such as Moon they failed and the cherry on top was the bankruptcy of FTX in November. However, this year cryptocurrencies have been one of the best performing assets“, maintains Rafael CalderonSenior Strategy Specialist at Bitso in dialogue with Ambit.
Why did cryptocurrencies win in the semester?
The FTX crisis in November 2022 and the financial crisis which took place since March 2023 generated a high level of distrust in relation to the traditional financial system. That ended up generating support for companies in the crypto-asset market, and made investors reevaluate where they wanted to keep their money.
Another factor that boosts cryptocurrencies is the expectation That the aggressive rate hike policy of interest of the Federal Reserve is coming to an end, regardless of the two future increases recently announced.
On the other hand, during the first months of 2023, arose new use cases within the Bitcoin network that attracted both users and developers. The movement was led by a protocol called “Registrations” that allows the creation of NFTs and tokens directly on Bitcoin.
This provoked greater interest and impacted the number of daily transactionswhich reached a peak of nearly 700,000 at the end of May. “Though these new use cases caused divisions and controversy within the Bitcoin community, it cannot be denied that drove demand and interest in the network”, they explain from Lemon to Scope.
Another promising sign was carried out by blackrockthe world’s largest investment asset manager, when applying for a Bitcoin ETF. Said petition inspired more financial institutions like WisdomTree, Valkyrie Investments, Invesco, Bitwise, among others, to introduce Bitcoin ETFs as well.
That is going to allow institutional money to re-enter the cryptocurrency industry through Bitcoin and indicates that the traditional financial market has its sights set on the crypto world.
Complications for altcoins
Although Bitcoin is managing to attract interest from the traditional market, according to Lemon, the rest of the crypto market is going through “a totally different picture”. They explain that this has to do with recent complaints from the agency in charge of regulating the US financial market, the SEC, against Binance and Coinbase.
The debate revolves around the commercialization of cryptocurrencies that could be classified as Securitieseither financial values, and that, therefore, must be subject to another type of regulation. The criteria to determine if they are considered financial assets or not is based on determining who controls them and how was it the initial distribution of the tokens. Following this criterion, regulators seem to agree that Bitcoin falls into that category thanks to your decentralization and his free initial distribution.
With less regulatory uncertainty, Bitcoin is attracting capital, both from traditional financial institutions and from investors in the crypto ecosystem. “For this reason, the dominance of BTC compared to the rest of the cryptocurrencies is at the highest levels of the last two years. Today, for every 10 dollars in crypto, 5 are in BTC,” they comment from Lemon.
“Although the impact on prices was significant, the market has recovered very quickly what is a very positive sign about the good health of the crypto world today,” says calderonof Bitso.
Local growth
In Argentina, the uncertainty regarding monetary and economic policies, interest rates tall and inflation They also prompted investors to seek alternative assets such as haven of value.
In this framework, according Lemonin the country there are already more than 5 million peoplehe 20% of people in the workforcethe ones that they own cryptocurrencies.
Source: Ambito
I am a 24-year-old writer and journalist who has been working in the news industry for the past two years. I write primarily about market news, so if you’re looking for insights into what’s going on in the stock market or economic indicators, you’ve come to the right place. I also dabble in writing articles on lifestyle trends and pop culture news.
