Bitcoin Underperforms Stocks, Gold for First Time Since 2018

[ad_1]

Gold and stocks underperformed in 2022, but it’s been a tough year for Bitcoin (BTC) investors, in particular.

Worst year for Bitcoin since 2018

Bitcoin price looks set to end 2022 down nearly 70%, its worst year since the 2018 crypto crash.

Monthly bitcoin returns. Source: Coinglass.com

BTC’s depressed performance can be explained by factors such as the Federal Reserve raising interest rates to curb rising inflationary pressures, followed by the collapse of many crypto firms including Terra, Celsius Network, Three Arrow Capital, FTX and others.

Some companies had exposure to defunct companies, usually by holding their native tokens. For example, Galaxy Digital, a crypto-focused investment firm founded by Mike Novogratz, confirmed a loss of $555 million in August due to the holding of Terra native asset LUNA, which turned around. crushed 99.99% since the beginning of the year.

Click Collect under the illustration at the top of the page or follow this link.Meta, Tesla shares reflect Bitcoin in 2022

The above catalysts have prompted Bitcoin to drop 65% year-to-date (YTD).

BTC/USD daily price chart. Source: Trading View

Meanwhile, the U.S. benchmark S&P 500 has plunged almost 20% year-to-date to 3,813 points as of Dec. 28. That puts the index on its steepest single-year decline since the 2008 economic crisis. The bloodbath proved worse for the tech-heavy Nasdaq Composite, down 35% since the start of the l ‘year.

Prominent losers include Amazon, which has slumped around 50% since the start of the year, as well as Tesla and Meta, whose shares have fallen nearly 72.75% and 65%, respectively. On the surface, tech stocks and bitcoin suffered similar losses in 2022.

BTC/USD against IXIC, TSLA, META YTD price performance. Source: Trading View

Much like Bitcoin, Fed rate hikes remain the most critical factor in the US stock market’s underperformance. But it remains to be seen whether tighter monetary policy would lead to an economic recession in 2023.

This uncertainty has pushed capital into the US dollar for safety reasons, with the US Dollar Index (DXY), a barometer for gauging the health of the greenback against major foreign currencies, up almost 8, 5% since the beginning of the year.

DXY daily price chart. Source: TradingViewGold is not a “safe haven”

Spot gold is up 0.14% year-to-date at nearly $1,800 an ounce, making it a better performer than Bitcoin and the US stock market.

XAUUSD daily price chart. Source: Trading View

Nonetheless, the year saw gold deviate from its “safe haven” characteristics in the face of a stronger dollar and rising US bond yields.

For example, the precious metal is down 22% from its 2022 high of $2,070, although some losses have been pared as the dollar’s uptrend lost momentum in the second half of 2022.

Bitcoin still winning since March 2020

Bitcoin had gained 1,650% after hitting a March 2020 low below $4,000, boosted by the Fed’s quantitative easing policy. Even as of December 28, investors who bought Bitcoin in March 2020 are sitting on 332% profit.

BTC/USD weekly price chart. Source: Trading View

By comparison, the US stock market and gold’s pandemic-era rally were weak.

For example, the Nasdaq Composite Index rose to 143% after hitting a low of 6,631 points in March 2020. So investors who were able to gain exposure to Nasdaq stocks during the easing era are sitting at the peak of a maximum of 56% in earnings on paper in December. 28.

IXIC weekly price chart. Source: Trading View

The same goes for gold, which was up just 43% during the pandemic era and is now up 26.50% from its March 2020 low of around 1,450. $.

XAUUSD weekly price chart. Source: Trading View

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

[ad_2]