Bitcoin, worth over $30,000: what’s happening

MILAN. Bitcoin starts running again. The popular cybercurrency has crossed the $30,000 threshold, a level it had abandoned in June 2022. From the lows marked in the fall of last year, the recovery in the value of Bitcoin has exceeded 90%. The recovery affects the whole sector: the market value of all 23,000 cryptocurrencies has increased by about four percent, reaching $1.24 trillion. As of November, this value was less than $800 billion.

Experts are positive. «So far, digital asset prices, led by Bitcoin, have experienced a very positive 2023 – comments Mirva Anttila, Director Digital Assets Research, WisdomTree -. Together, these two assets still account for more than 63% of the total digital asset market capitalization. As the US Federal Reserve (Fed) continues to raise interest rates, the market seems to expect that recent bank failures (Silvergate Bank, Signature Bank, Silicon Valley Bank, Credit Suisse) will lead to central bank easing. Lower interest rates would favor long-dated assets, such as digital assets. Also, many traders were caught off guard and short sellers, who expected digital assets to fall further, had to liquidate their positions causing prices to rally.

“We believe we could be on the cusp of the fourth major cryptocurrency bull market, although the exact timing is uncertain,” Mirva Anttila said. We believe the next bull market will be driven by advances in the speed and scalability of blockchain networks, more intuitive user interfaces and innovations in blockchain wallets, as well as developments in digital identity, which will pave the way for Web3 applications. The determining factor, of course, will be the user applications that conquer the market and we will continue to constantly monitor potential candidates».

Dollar digital tokens emerge as an important use case

Stablecoins, or digital tokens issued on public blockchains and pegged to an underlying asset, such as a currency or physical asset, were initially used for trading and settlement between exchanges, but have become increasingly popular in payments and remittances. Since stablecoins are global and accessible to anyone, they represent an attractive means to cheaply and securely transfer money around the world, 24/7, and to settle trades (nearly) instantaneously. The world‘s largest stablecoin, Tether’s USDT, is particularly popular in Asia, while Circle’s USDC is heavily used in the West. Stablecoins are designed to offer stability, whereas an asset like Bitcoin is more volatile.

To give an idea of ​​the scale of transaction volumes, Visa settled $12 trillion worth of payments last year, mostly related to consumer spending, while stablecoins settled $8 trillion worth of on-chain transactions, higher than the $2.2 trillion Mastercard cleared or the $1 trillion American Express cleared. “This year it is possible that the combined amount of stablecoin transactions will exceed the payments cleared by Visa – says Mirva Anttila -. The stablecoin transaction volume data obviously does not concern consumer spending, but rather payments, trading and decentralized finance, and does not take into account trading volumes on centralized exchanges.