• 2022 is set to be the second worst year for Bitcoin since 2011, with a year-to-date (YTD) performance of -65%.
• According to Arcane Research, the crypto winter was fueled by tightening macroeconomic conditions and crypto-specific leverage, as well as poor risk management.
• Arcane Research predicts that Bitcoin will trade in a mostly flat range in 2023, but finish the year with a higher price than it started.
The year 2022 is shaping up to be one of the worst years for Bitcoin since its inception in 2011, with a year-to-date (YTD) performance of -65%. This performance is only topped by 2018, when the price of Bitcoin lost -73% in one year. According to a year-end report from Arcane Research, physical gold (-1% YTD) has significantly outperformed digital gold, Bitcoin, in a period of high inflation. This has led the analytics firm to conclude that the ‘digital gold’ narrative was premature.
The report further explains that the ‘crypto winter’ of 2022 was fueled by tightening macroeconomic conditions and crypto-specific leverage, as well as poor risk management by core market participants. As a result, Bitcoin followed the US equity markets closely, with only two distinct events in 2022 which led to significant underperformance – June (3AC, Celsius etc.) and November (FTX).
Looking ahead to 2023, Arcane Research believes that contagion effects will “probably” continue in the early stages of the year, however they predict that the majority of the year will be less frantic and more uneventful compared to the last three years. As such, they anticipate that Bitcoin will trade in a mostly flat range in 2023, but will end the year with a higher price than it did at the start.