It's been a while since I wrote about crypto prices going up, but that's precisely what we've seen so far in 2023. BTC and ETH are up over 30% YTD. Although price action gets the most attention, when dealing with emerging technology such as crypto, short-term price swings are not the key metrics we in the industry focus on. Adoption, and more precisely the rate of adoption is what we care about most. So while the price increase in 2023 so far has been a welcome change from 2022, according to a new report, there are several metrics about adoption that I consider much more bullish:
Global crypto owners increased by 39% in 2022, rising from 306 million in January to 425 million in December.
Bitcoin (BTC) owners grew by 20% from 183 million in January to 219 million in December, accounting for 52% of global owners;
Ethereum (ETH) owners grew by 263% from 24 million in January to 87 million in December, accounting for 20% of global owners.
Bitcoin remains the dominant digital asset in crypto. The Central African Republic became the second country in the world to accept BTC as legal tender, and several traditional finance powerhouses such as Fidelity and Goldman Sachs started offering their clients exposure to bitcoin.
However, Ethereum grew at a faster pace than Bitcoin due to the popularity of certain NFT projects like Yuga Labs, Meta incorporating NFTs into Instagram, and of course, the successful Merge which transitioned the network from Proof of Work (PoW) to Proof of Stake (PoS), attracting many retail and institutional investors to Ethereum.
So is the bear market over? In the short term, probably not, because the factors that caused the bear market remain unchanged. Inflation is still running higher than the central bank’s targets, and interest rate increases are expected to continue through 2023. However, if you’re in crypto, you should have a low time preference and think long-term.