• Bitcoin had a year-to-date performance of -65% in 2022, the second-worst year since 2011.
• Physical gold outperformed digital gold, Bitcoin, due to high inflation.
• 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.
In 2022, Bitcoin had a year-to-date (YTD) performance of -65%, making it the second-worst year for the digital currency since 2011. According to Arcane Research, physical gold (-1% YTD) outperformed digital gold, Bitcoin, in a period of high inflation. This underperformance was primarily due to two distinct events that occurred in June and November, when BTC followed U.S. equities very closely.
Looking ahead to 2023, Arcane Research expects that contagion effects will “probably” continue in the early part of the year. However, the firm predicts that the majority of the year will be less frantic than the last few years, with Bitcoin trading in a “mostly flat range” throughout the year. Despite this, they believe that Bitcoin will finish 2023 with a higher price than it started.
The analyst firm notes that this performance is in stark contrast to other asset classes such as stocks and gold, and that the crypto winter was largely fueled by tightening macroeconomic conditions, as well as crypto-specific leverage and poor risk management. It’s clear that the digital gold narrative was premature, as the current market environment shows.
Overall, while Bitcoin may not experience the type of performance it had in 2017, Arcane Research predicts that the digital currency will still finish the year with a higher price than it started. With this in mind, investors should keep a close eye on the market and look for opportunities to capitalize on any potential price movements in the months to come.