Good news for the crypto sector in this early 2023, particularly for Bitcoin and Solana.
To be fair, as early as December 2022 there were beginning to be signs of a possible better trend, but it was from the beginning of the year that there seems to have been a momentary turnaround.
The December of crypto assets Bitcoin and Solana
Speaking of December, the CryptoCompare Asset Report has just been released.
The report shows that in December 2022, although the digital asset markets had continued to fall, volatility fell sharply from the previous month.
At the end of the year, Bitcoin’s price closed -64.2%, or the second worst annual performance in its 13-year history, and with trading volumes in December down as much as 42.6% from November.
However, November had been a peculiar month, with high volumes and high volatility due to the collapse of FTX.
Instead, in December volatility returned to normal after November’s record highs, such that BTC was the least volatile asset during this period. The year 2022 ended with 30-day volatility at 27.9%, or just above the annual low of 26.8%.
For Solana, the drop in volumes was even more significant, with those on the SOL-USDT trading pair down as much as 80.6% compared to November. BTC-USDT volumes fell by 42.6%, and ETH-USDT volumes fell by 57.0%.
Apart from USDT, it was still Bitcoin that recorded the highest trading volumes in December, accounting for 47.0% of the total spot volume on centralized exchanges, which is the second best performance in 2022.
Analysis of Bitcoin and Solana crypto assets
Low volatility and stronger relative performance have made Bitcoin the asset of choice for traders and investors.
In addition, in the month of December alone there was a 4.43% increase in daily transactions on some of the major layer 2 protocols, an increase of 758% year-on-year.
The year 2023 began with a +5% for the price of Bitcoin, which has returned to mid-December levels.
Indeed, looking at the graph of BTC’s price for the first 11 days of 2023, it appears to be moving upward, although at levels still below those of 14 December, for example.
Note that after the collapse due to the FTX bankruptcy, with the 2022 annual low touched on 9 November below $15,500, and after the return to those levels on 22 November, the price has always remained above $16,000, with the $17,000 crossing from 1 to 14 December.
By December 17, however, it had returned to $16,500, and then began its rise on 2 January 2023.
Solana‘s ecosystem started the year on a positive note, thanks to an increase in average weekly active addresses from 378.2 million to 490.5 million. While this is partly due to BONK’s airdrop, SOL’s price trend tells a different story.
In fact, a downward phase also began for SOL on 15 December, ending with the 2022 annual low at $8.4 on 29 December.
As this decline started at $14.7, it was a loss of 42% in two weeks.
But then as early as 30 December, the price returned to the $10 level, and starting on 2 January it began a strong climb back up to $16, which is a doubling in less than two weeks.
The current price is still below that of 11 November, though, after the move following the collapse due to the FTX bankruptcy.
So 2023 is off to a very good start for Solana, although it has yet to recover much from November’s losses.
The price of Ethereum
The price of ETH is also performing well.
From just under $1,200 at the end of December, it has risen 11%, with the current price being significantly higher than even June and July 2022.
Indeed, during the collapse caused by FTX, the price of ETH never fell below the 2022 annual lows made in June, denoting interesting strength.
Even for ETH though, volatility has reduced quite a bit, although it is still greater than that of Bitcoin.
However, it was not the best-performing cryptocurrency in the top 10.
Cardano (ADA) analysis
The best-performing of the world’s top 10 cryptocurrencies by market capitalization is ADA, Cardano’s blockchain cryptocurrency.
In fact, since 31 December it is registering +25%, higher even than BNB’s +14% and Polygon’s +13%.
Cardano closed 2022 at $0.25, or down 81.2% since the beginning of the year. This was the second largest annual decline in its history, behind only the 94.3% drop during the 2018 bear market.
After such a large drop, a good rebound was to be expected in the event of a recovery in the crypto markets.
Although it is still early indeed to talk about a recovery, the 2023 chart of the ADA price seems to suggest that this is not just a trivial post-minimum bounce.
At this time, it is not yet possible to say with certainty that a trend reversal has occurred, or even that the bottom of this bear market is now behind us, but at least on the short term the pain seems to be over.
The strong rebounds in Cardano and especially Solana seem to indicate rather clearly that the panic that dominated the crypto markets in both November and December has dissipated. It remains to be seen, however, whether it will return, or whether it will grant a relief period.