© Reuters
Investing.com – 2023 has been a positive year for cryptocurrencies so far, with the . de Bernstein to wonder about the reasons for the rise and the chances of it continuing.
, which had suffered more than other cryptos from the collapse of FTX, for example, posted a gain of more than 75% since the start of the year on its peak at $17.45 on Monday. Now down at $16.10, SOL remains up over 60% in the early days of 2023.
The case of is even more impressive, with a gain of 136% between January 1 and the start of the week peak at $2.26, a gain reduced to 95% as the crypto LDO has now corrected to $1.87.
Bernstein explains the sharp rise of Lido DAO and Solana
Citing the cases of LIDO and Solana specifically, Bernstein analysts pointed out that a “large number of sharply rising tokens are those that have been shorted the most.”
Analysts explained that LIDO has suffered from concerns that the upcoming upgrade from (Shanghai) will fail to introduce the planned ability to withdraw staked Ethereum, contrary to initial expectations.
Regarding Solana, they recalled that the cryptocurrency suffered more than others from the fallout from the collapse of FTX, which together with its sister company Alameda Research had invested heavily in SOL.
In the note, published on Monday, Bernstein pointed out that the rise was accentuated by a short squeeze, noting that “over the past 24 hours, forced buying has been made to cover short positions”.
Analysts also argued that “with optimism surrounding China’s reopening, bulls argue that buying has been led by Asia, rather than the United States where sentiment is still weak following (of the bankruptcy of) FTX”, while emphasizing that this is probably a “transitory” factor, noting that “crypto markets are generally more optimistic in the run-up to Chinese New Year”.
2023 will be the year the market begins to appreciate the true potential of cryptocurrencies
Looking ahead, Bernstein analysts recommended investors “read the blockchain,” and take a step back, pointing out that “extremes in crypto tend to be magnified in both directions,” and that “ periods of great stress have been great times to (…) build long-term positions”.
Analysts have thus warned that “predictions that announce the end of cryptocurrency for the “next years” are once again at the extremes” and that they do not take into account blockchain data which shows that “the Developer activity remains strong.
Thus, Bernstein analysts concluded that “2023 will be the year the market begins to appreciate the utility and non-speculative application potential of crypto”, emphasizing that “this evolution will be led by DeFi, games, NFT-based social, brands and commerce”.