No “Crypto Spring” in Sight Despite Bitcoin’s Rebound

In the midst of a crypto winter, investors can enjoy a strong start to the year with the price of Bitcoin, the original and most popular blockchain-rooted asset, up around 30% since the start of 2023 to reach around €20,857 this week. Still, experts say a rebound in asset prices does not make a crypto spring.

In reality, veteran UK investor Jeremy Grantham warns in a research note, crypto assets – after a “surprisingly large $2 trillion loss” in 2022 – behave much the same as other speculative assets. to start the year. “I’ve read about the recent 20% rally in Bitcoin and friends,” Grantham writes, “which was allegedly for exotic reasons. More likely to me, it’s just the usual crypto style of behaving like the more speculative stocks, which almost all had a terrible 2022.”

A gathering of this nature after “a bloodbath” like last year’s is not uncommon, he continued, and it remains to be seen whether it will “survive January”.

The big names in the industry are, of course, certain that this will be the case. Brian Armstrong, chief executive of crypto exchange Coinbase, tweeted earlier this week that soaring US national debt makes the “bullish case” for Bitcoin. The argument is that if the US continues on this path, then Bitcoin – which is theoretically immune to devaluation by central banks – will eventually be seen as a more stable asset than the dollar.

That sounds like a pretty promising argument, to put it politely, given the damage done to the industry over the past year. Already in decline before the current gloom set in, business activity in the still-niche space fell to two-year lows in the final months of 2022. There’s also a big gap between optimism of the language of the crypto-sphere and its Actions. Coinbase, for example, recently announced a second round of layoffs in an effort to reduce its global workforce by another 20%. Gemini, the exchange founded by the Winklevoss twins of Facebook, is in the process of cutting its 1,000 employees by 10%.

Despite asset prices rallying in January, the hatches are clearly closing in and the full bloom of the crypto spring still seems a long way off.


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