Investing.com – 2023 has been a good year for cryptocurrencies so far, with de Bernstein questioning the reasons for the rally and whether it will continue.
, which had suffered more than other cryptocurrencies from the FTX crash, for example, has seen a more than 75% gain year-to-date on Monday’s $17.45 peak. Now down at $16.10, SOL remains up more than 60% in the first few days of 2023.
The case of is even more impressive, with a 136% gain between January 1 and the start of the weekly peak at $2.26, a gain reduced to 95% as the crypto LDO has now corrected to 1. $87.
Bernstein explains the strong rise of Lido DAO and Solana
Citing the cases of LIDO and Solana in particular, Bernstein’s analysts pointed out that “a large number of sharply rising tokens are the ones that have been the best sellers”.
Analysts explained that LIDO was impacted by concerns that the upcoming upgrade from (Shanghai) will fail to introduce the planned ability to stake Ethereum, contrary to initial expectations.
As for Solana, they recalled that the cryptocurrency suffered more than others from the fallout of FTX, which together with its subsidiary Alameda Research had invested heavily in SOL.
In the note, released on Monday, Bernstein stressed that the rally was accentuated by a short squeeze, noting that “forced buying has been made in the past 24 hours to cover short positions.”
Analysts also argued that “with optimism surrounding China’s reopening, bulls argue buying has been led by Asia, rather than the US, where sentiment is still weak following (the bankruptcy of) FTX,” while emphasizing that this is likely a “transitional” factor, noting that “cryptocurrency markets are generally more optimistic in the run-up to the Chinese New Year.”
2023 will be the year the market begins to appreciate the true potential of cryptocurrencies
Looking ahead, Bernstein’s analysts recommended that investors “read the blockchain” and take a step back, noting that “extremes in cryptocurrencies tend to be magnified in both directions” and that “periods of great stress are been excellent moments to (…) build long-term positions”.
Analysts have thus warned that “predictions announcing the end of cryptocurrencies for the “next years” are once again at extremes” and that they do not take into account blockchain data showing that “developer activity remains strong.
Therefore, Bernstein’s analysts concluded that “2023 will be the year in which the market starts to appreciate the utility and non-speculative application potential of cryptocurrencies”, underlining that “this evolution will be driven by DeFi, gaming, social based on NFTs, brands and commerce”.