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Data suggests that 'crypto winter' may have now progressed into 'crypto spring'

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(Kitco News) - Navigating the cryptocurrency market can be a tricky proposition as the asset class is well known for its high volatility and ability to turn on a dime, and it is especially daunting in the periods during or just after a crypto winter when uncertainty is high and fear is rampant.

This year has seen the hottest start to any year for Bitcoin since 2013, with the top crypto up 80.65% since January 1 at the time of writing, earning BTC the mantle of being the best-performing asset thus far in 2023.

Despite these statistics, concerns related to the wider economy and lingering trauma from the devastation of 2022 have left many wondering if the crypto winter has, in fact, come to an end, or if there is more pain in store in the near future.

While it's impossible to predict what will ultimately happen, aside from the performance of Bitcoin thus far in 2023, there are several developments that point to the emergence of a ‘crypto spring’ as investors around the world view BTC and digital assets as a haven from the unfolding banking crisis.

One piece of evidence was put forward by the fintech firm Block (NYSE:SQ), creator of the popular Cash App, which reported an impressive $2.16 billion in Bitcoin revenue generated in Q1 by the application used to purchase, send and store BTC.

According to a shareholder letter announcing its Q1 2023 earnings, Block reported that its revenue generated from the total sale of Bitcoin to customers was up 18% from $1.83 billion in Q4 and 25% from Q1 2022.

The total profit for Cash App in Q1 was more than $931 million, marking a 49% increase year-over-year (YoY). The gross Q1 profit for Block, which also owns the popular business payment service Square, was $1.71 billion, an increase of 32% YoY.

Block attributed the YoY increase in Bitcoin revenue and gross profit to “an increase in the quantity of Bitcoin sold to customers, partially offset by a decrease in the market price of Bitcoin compared to the prior-year period.”

Despite the crypto winter, 75% of crypto holders are confident about the future of the industry - Paxos

Crypto assets under management increased by 66%

Further evidence of the improving outlook for the cryptocurrency landscape was provided by Fineqia International, a digital asset business focused on investing in early and growth-stage technology companies, which published a report showing a 66% increase in digital assets under management thus far in 2023.

According to Fineqia, an analysis of global Exchange Traded Products (ETPs) with digital currencies as their underlying assets has “revealed the total Assets Under Management (AUM) increased by 66%, representing a 29% rise in their value vis-à-vis the broader digital asset market, which grew 51% in the four months this calendar year.”

ETPs include Exchange Traded Funds (ETFs) and Exchange Traded Notes (ETNs). Information for 155 digital asset-backed ETPs from publicly available sources, including Grayscale Investment LLC and VanEck Associates Corp, was used to compile the data.

Fineqia found that year-to-date, the AUM for these products has increased from $19.9 billion to $32.6 billion, while the digital asset market value rose from $796 billion to $1.2 trillion. Even though the April AUM decreased by 2% to $32.6 billion from $33.3 billion, the overall value of cryptocurrencies remained stable at around $1.2 trillion.

“The rising AUM figures show a healthy appetite among investors so far this year for securities backed by digital assets," said Fineqia CEO Bundeep Singh Rangar. "They had a chance to review their positions in April, ahead of the Fed's interest rate decision on May 3."

While the figures for 2023 thus far are encouraging, the macro picture shows just how dire the crypto winter got as “the year-on-year data showed a 30% decrease in the total crypto market value compared with the $1.7 trillion on Apr. 30 last year.”

This indicates that the market still has a ways to go to get back to its former glory. Still, so far, it's off to a good start, which has prompted many crypto enthusiasts and even several institutions, including Standard Chartered, Coinbase, and H.C. Wainwright, to declare that the crypto winter is over.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.