Good morning, dear readers. The crypto market has experienced some unusual events in 2023, with heightened volatility in Bitcoin and Ether, a slow start to the year, and adjustments driven by both external factors and internal changes within the market itself. A new report from K33 Research highlights this volatility and explores the potential reasons behind it, as well as the possible remedies.
The Bitcoin price range has fluctuated between $25,800 and $28,000 over the last week, showing increased volatibility attributed to factors such as the U.S. debt ceiling negotiations, Asian regulatory shifts, and Recep Erdogan’s re-election as president of Turkey. Along with structural shifts in the crypto market, such as the growing prominence of stablecoins and Ether, the report suggests similarities with the previous bear market. Insufficient de-risk rotation is a potential issue, and the solution requires more liquidity – an elusive prospect thus far.
One possible new market driver may be Ether, which has become increasingly deflationary; over 143,830 ether worth $275 million has already been burnt, with a negative supply growth of 1.46% per year. Experts claim that Ether’s deflationary stance has weakened the correlation between Ether and Bitcoin, with the former experiencing an increase of 2.8% in the last week compared to Bitcoin’s 2%. Pulkit Goyal, Vice President of trading at OrBit Markets, stated that this could signify a long-term regime change, due to the ongoing divergence in supply-demand economics between the two digital assets.
This change in the market also coincides with Berenberg’s assertion that MicroStrategy represents an attractive alternative to Coinbase for investors seeking exposure to the cryptocurrency sector. Meanwhile, the BRC-721E token standard allows traders to convert Ethereum NFTs to Bitcoin NFTs and the DeFi sector faces a lackluster outlook, as demonstrated by the decline of hyped-blockchain Canto.
Further news includes Tether investing in sustainable Bitcoin mining in Uruguay, as well as the slide in Optimism token prices by 7% before the $580 million OP unlock, which will double the token supply. These events reflect both the opportunities and challenges within the ever-evolving crypto landscape.
As 2023 continues, the dynamics of the crypto market are shifting in response to various internal and external factors. A new market driver is needed to lift prices higher, with Ether being a possible candidate to fulfill this role. However, the path ahead remains uncertain, as investors and enthusiasts alike navigate an increasingly complex and unpredictable market. Stay tuned for the latest developments and discussions here on our blog.
Source: Coindesk
