This week in coins. Illustration by Mitchell Preffer for Decrypt.
Knock on wood, but the year 2023 is two weeks old and Crypto’s green shoots haven’t been pruned yet.
None of crypto’s top 20 coins saw significant losses this week. Bitcoin (BTC) and Ethereum (ETH) rose on encouraging signs that US inflation slowed in December.
BTC surged above $19,000 on Thursday for the first time since just before FTX collapsed in early November, thanks to news from the Bureau of Labor and Statistics that inflation is slowing to 6.5% in December from 7.1% in the previous month would have. Markets (both equities and crypto) clearly took these trends as an indication that the Federal Reserve may soon slow its relentless escalation in interest rates to counter rising prices.
On Friday night, BTC continued its rally, surpassing $20,000 and erasing its FTX-related losses. According to data from CoinGecko, it is up 23% over the past week to $20,899 at the time of writing.
ETH posted similar gains, rising steadily from Wednesday on inflation reports. The world’s second-largest cryptocurrency is up an encouraging 21% for the week, surpassing $1,400 on Thursday and trading at $1,538 on Saturday morning. ETH hadn’t seen such highs since Nov. 8 when FTX crashed, taking the crypto market with it.
Equities fared similarly, with the S&P 500 and Nasdaq both posting their best weekly performances since November.
While crypto traders certainly welcomed riding the Wall Street wave, others advised caution.
“It’s a worrying trend that Bitcoin is moving in lockstep with traditional financial indicators and stock markets,” Laguna Labs CEO Stefan Rust told Decrypt earlier in the week. “As we know, bitcoin was created as an alternative financial system to Wall Street, and it feels like we may be going astray.”
Meanwhile, the week’s biggest gainers surged on crypto-specific news that was independent of macroeconomic trends.
AVAX, the Avalanche blockchain’s native token, soared a whopping 29% on Wednesday alone after it was announced that its developer Ava Labs will soon offer crypto infrastructure through a partnership with Amazon Web Services. The development will see Amazon use its market dominance to encourage Avalanche adoption in the public and private sectors. AVAX ended the week up 44% on Saturday morning.
Lido, the liquid staking protocol, saw similarly notable gains for Lid this week on encouraging developments on the Ethereum network.
Since the Ethereum merger transitioned Ethereum to a proof-of-stake system in September, network participants have been able to earn newly minted ETH as a reward for staking existing ETH with the network. Lido is a leading service that allows users to pool and stake their ETH to earn more; Over $7 billion worth of ETH has been staked through the project.
But these users have not yet been able to withdraw their wagered ETH. This capability will come with Shanghai, an upgrade to the Ethereum network that appears to be on track for a March launch. As Ethereum’s core developers reported no issues with the rollout of the update, LDO surged 41% this week.
And then there’s Solana. After a brutal year-end streak due to its close ties to the FTX ecosystem and Sam Bankman-Fried, SOL is on a comeback ride, up 65% in the past seven days to $22.54 as of Saturday morning.