CoinDesk research shows that per unit of risk, bitcoin and ether performed significantly better than bonds and had similar results to equities in 2022.
Although the world’s largest cryptocurrency by market value, bitcoin (BTC), saw a roughly 64% decline in value year-to-date, CoinDesk research shows that bitcoin and ether returns in 2022 per unit of risk were about the same as equities and significantly better than bonds.
“We want to underscore this is not too different from what you would see in traditional markets, especially stock markets,” said Andrew Baehr, CoinDesk Indices managing director, on First Mover CoinDeskTV.
“Look at some of the darlings that people were really excited about 18 months ago in stocks, they’ve lost 80-90% of their value as well.”
Bitcoin and ether appeared to be affected by the same forces that made stock investing a challenge over the past year, including high inflation and the looming threat of recession. According to CoinDesk data, stocks were nearly twice as risky in 2022 as 2021.
When looking at what caused this, Baehr said in a research report, that liquidity has to be the number one candidate. “When you look back at the negative events in the cryptocurrency industry it’s not too hard to draw an arrow to quickly deteriorating liquidity conditions as a partial cause,” said Baehr.