Crypto performance 2022 – The Cryptonomist

This article will address the topic of cryptoasset performance in 2022 from a systematic point of view. This is certainly a somewhat uncomfortable topic given the trend of the sector over the last year, but it can help to understand how to move within this market.

Specifically, some of the most capitalized cryptocurrencies will be considered, including BTC, ETH, BNB, XRP, including several altcoins.

In Figure 1 we can see in the ‘Perf. column %’ how the performance of 2022, for the assets in question, was almost overall disastrous. All cryptocurrencies considered recorded very serious losses, between -52.5% and -98.5%.

Figure 1. Returns in the crypto sector in 2022

The best was BNB, which despite the criticisms and solicitations to which the “crypto exchange” sector was subjected following the FTX affair, achieved a negative return of 52%, deriving from the opening of the year 2022 which took place in $518.6 and closed at $246.3.

Scrolling through this list we also find BTC, which scores -64.9%, DOGE -58.9%, ETH at -67.8% and MATIC -70.3%.

But there are also those who did worse, such as LUNA (-98.5%), whose story is sadly known to all users of the Terra ecosystem, and with it the entire DeFi sector including among the other AAVEs ( -80.2%), FTM (-90.5%), AVAX (-89.3%) and CRV (-89.8%) which suffered losses of more than 80%.

The Metaverse sector, which had been talked about a lot the previous year, also closed the year in the worst way: SAND (-93.5%), MANA (-91%) and AXS (-93.6% ) performed even worse than other sectors, reaching losses of more than 90%.

A review of the performance of the crypto sector in 2022

As mentioned, 2022 was disappointing as it saw heavy losses across almost the entire industry. It certainly left an indelible mark on all investors. It will not be easy to regain confidence immediately, but as has already happened in the past with Bitcoin (and the crypto sector in general) things can change in a short time.

In fact, proceeding with the analysis, Figure 2 shows how although the current year has just begun, there are many cryptocurrencies that are attempting a recovery, such as SOL (+59.9% in the first days of 2023), MANA ( +33.5%) and SAND (33.2%), even if they are still far from the ‘All time highs’, ie the absolute maximums recorded by the market. Bitcoin in particular saw a slight increase in the first days of 2023, but the distance from the all-time highs still amounts to a whopping -74.95%.

Figure 2. Returns in the cryptocurrency sector in January 2023 and distance from all-time highs

In short, there is still a long way to go, although we could soon see a new Bitcoin halving, which is usually preceded by a Bitcoin rebound accompanied by the entire crypto sector.

The comparison with traditional markets, visible in Figure 3, also highlights how Bitcoin, and the entire crypto world, are still very volatile markets that require study, dedication and proper risk management before they can be fully understood.

Figure 3. Comparison with traditional markets

In particular QQQ, the ETF that invests in the 100 most capitalized technology stocks in the United States of America, scores a -34% in 2022, as does SPY (ETF on the S&P500), which scores a more dignified -20.5%.

Nothing compared to the performance of bitcoins or other cryptocurrencieswhich following a strong rally have performed slightly worse than traditional markets.

However, the strong correlation that tied markets like the Nasdaq and the S&P500 to the cryptocurrency sector in 2022 remains in the public eye. A sector initially considered in its own right, but which has shown a clear link with traditional finance, in particular with the restrictive policy of central banks.

We conclude this overview with TLT, which is an ETF that invests in US bonds with a maturity over 20 years, registering a resounding -29.35%.

Thus, the only markets that have been exempt from the 2022 beating are USO (an ETF that invests in oil) and GLD (an ETF that invests in gold), which are up +22.2% and +1.26% respectively.

While waiting to see what surprises 2023 will hold, we strongly urge you to use extreme caution in the markets to avoid overexposures that could seriously affect the overall performance of the portfolio, especially before the markets show clear signs of recovery.

See you next time and happy 2023 everyone!

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