Monthly Archives: Dezember 2022

You are browsing the site archives by month.

Crypto Firms See Major Drawdowns in 2022

– 2022 was a difficult year for public crypto firms, with most of them underperforming Bitcoin and recording drawdowns of 90% or more.
– Microstrategy, the company with the largest exposure to BTC, saw a drawdown of 74%.
– Mining companies were especially hard hit, with most of them recording drawdowns of 90% or more and Core Scientific even filing for Chapter 11 bankruptcy.

This year was a challenging one for the public companies in the crypto sector. According to the year-end report from Arcane Research, most of the big players in the market performed poorly over the last twelve months, with drawdowns ranging from 65% to 99%. Bitcoin, the biggest cryptocurrency by market cap, did not escape unscathed either, recording a negative return of around 65%.

The most affected of all the companies seems to have been Core Scientific, a Bitcoin mining firm that suffered a drawdown of 99%. This led to the company filing for Chapter 11 bankruptcy earlier this month. Other mining companies also saw significant losses, with most of them being 90% or more underwater for the period.

The popular crypto exchange Coinbase was also one of the biggest losers, with its market cap dropping by 87%. This led to the firm being valued lower than meme coin Dogecoin. Microstrategy, a company whose stocks‘ main attraction is exposure to BTC through its large reserves, couldn’t perform comparably to the asset and observed a deeper year-to-date drawdown of about 74%.

It is not yet clear why the mining firms have performed so poorly, but some speculate that it could be due to the decrease in cryptocurrency prices, which has resulted in miners having to shut down operations due to the lack of profitability. Another potential factor could be the increase in competition as more miners enter the market and try to outbid each other for rewards.

The performance of public crypto companies in 2022 shows that the sector is still in its infancy and is yet to mature. The crypto market is highly volatile, and investors should be aware of the risks associated with investing in digital assets. As more companies enter the space, the sector will become more competitive and the firms will need to adapt in order to survive and thrive.

Bitcoin to Rebound in 2023, Predicts Arcane Research

• Bitcoin had a difficult year in 2022, losing 65% of its value compared to 2018’s 73% drop.
• Arcane Research predicts that contagion effects will continue in early 2023, but the majority of the year will be less frantic than the past three years.
• The firm expects Bitcoin to finish 2023 with a higher price than it did at the start.

The past year has been a difficult one for Bitcoin, with the digital currency losing 65% of its value year-to-date (YTD). This is only slightly better than 2018’s performance, when BTC lost 73% in one year. In comparison, physical gold has outperformed Bitcoin significantly in this period of high inflation, making the “digital gold” narrative premature.

According to a year-end report by Arcane Research, the crypto winter was essentially fueled by tightening macroeconomic conditions and crypto-specific leverage, combined with poor risk management by core market participants. BTC was highly correlated with the US equity markets, with two distinct outliers in June and November resulting in the coin’s underperformance.

Looking ahead to 2023, Arcane Research predicts that contagion effects will “probably” continue in the early part of the year. However, the firm expects that the majority of 2023 will be less frantic and uneventful compared to the past three years. As such, the firm believes that BTC will trade in a “mostly flat range” during the year, with a higher price at the end of 2023 than at the start.

This prediction is further supported by the fact that the US economy is expected to continue to improve in the coming months, with vaccination numbers rising and the government offering more stimulus checks. This could help to increase the demand for Bitcoin, potentially pushing the price higher. In addition, institutional investors are expected to continue to enter the market, which could also provide a strong tailwind.

Overall, while the past year has been a difficult one for Bitcoin, it appears that the coming year could be more positive. With the US economy continuing to improve and institutional investors continuing to enter the market, the digital currency could end the year with a higher price than it started with.