• 2022 was a bear market for the crypto industry as both Bitcoin (BTC) and Ether (ETH) saw a 65% and 67% pullback respectively.
• Correlation behavior between Bitcoin and other macro assets remained an unfinished story, with only bonds ending the year uncorrelated to BTC while stock indices maintained a positive correlation and the U.S. Dollar Index maintained a negative correlation.
• Bitcoin mining companies struggled in the bear market, with the five largest public bitcoin miners measured by hashrate all seeing significant losses, with the best performer, CleanSpark, still dropping 79%.
This past year was a tumultuous one for the crypto industry, with both Bitcoin (BTC) and Ether (ETH) experiencing a 65% and 67% pullback respectively. These market performance difficulties had a knock-on effect on the mining sector too, with the five largest public bitcoin miners measured by hashrate all seeing significant losses. CleanSpark was the best performer of the five, though even they still dropped 79%.
Correlation behavior between Bitcoin and other macro assets is still an unfinished story. While bonds ended the year in an uncorrelated band to Bitcoin, stock indices maintained a positive correlation, and the U.S. Dollar Index maintained a negative correlation. This complicated the market picture further, making it harder to navigate the bear market conditions.
The impact of the bear market was felt across the crypto industry. Companies such as Coinbase and Kraken saw a dramatic decrease in trading volumes, while token offerings dropped off precipitously. Even DeFi, which had been one of the hottest sectors of the market in 2021, was unable to escape the bear market’s effects.
Despite the difficult conditions, there were a few bright spots in the industry. Institutional investors continued to show interest in crypto, with more than $2 billion being invested in the sector by the end of 2022. Additionally, the development of new technologies such as layer 2 solutions, non-fungible tokens, and decentralized storage options showed the continued potential of the industry.
All-in-all, 2022 was an eventful year for the crypto industry, with the bear market providing a much-needed reality check for the sector. While it was a difficult year, it also served as a reminder of the resilience and potential of the industry. With the market now showing signs of recovery, the next year could provide an opportunity for the industry to continue to grow and mature.