Cryptocurrencie outperform tech stocks in 2022
Over the last few days you may have felt nervous about looking at the cryptocurrency prices. Almost everything is in red! However, despite this, you may be pleasantly surprised to hear that crypto is not the most volatile asset class of 2022 — that award goes to high-flying tech stocks.
For the last few quarters the leading cryptocurrencies, such as Bitcoin and Ethereum, have tracked these stocks, but it appears that the tech stocks are declining faster than crypto tokens, according to data from TradingView.
As the pandemic ends, those brands that did extremely well during the time we were confined to our homes, such as Netflix, Meta, PayPal, Shopify and Zoom, now have plummeting share prices. Indeed, Netflix has been widely sharing its particular problems and solutions.
There are a number of reasons for these declines beyond the end of the global pandemic. Currently the key ones are the threat of inflation, interest rate hikes, and the geopolitical peril arising from Russia’s invasion of Ukraine. As The Defiant points out, the Nasdaq 100 index of tech names is down almost 17% this year, but many of the most widely owned names are down by double digits.
The decline of Netflix
Indeed, “Some are behaving in ways more closely associated with crazy cryptocurrencies,” says The Defiant pointing to Netflix, which fell by a staggering 35% last week, shedding more than $54B in market value. By comparison, Bitcoin’s worst one-day drop was about 40% on March 12, 2020, but that was triggered by the first wave of the Covid-19 pandemic and was part of a broader sell-off across the markets.
In 2022 to date, Bitcoin is down by 13.4% and Ethereum by 20%, according to CoinMarketCap data. But some tokens have jumped in value, such as Terra’s Luna, which is very popular in the DeFi sector, and has gained 8% this year.
The key takeaway from this story is a perennial lesson in the markets: big bets on growth can swing suddenly, even in established names such as Netflix.