Cryptocurrencies may not be the most volatile asset class of 2022 after all.
Many high-flying tech stocks have suffered year-to-date declines this year. While Bitcoin, Ether and other top tokens have tracked the performance of tech names for the last few quarters now it looks like the latter are sliding even further in this punishing period, according to data from TradingView.
Pandemic outperformers, including Netflix, Meta, PayPal, Shopify, and Zoom, have plummeted from their all-time highs as investors have become increasingly risk-averse amid the threat of inflation, interest rate hikes, and the geopolitical peril stemming from Russia’s invasion of Ukraine. The Nasdaq 100 index of tech names is down almost 17% this year, but many of the most widely-held names are down by double digits.
Some are behaving in ways more closely associated with crazy cryptocurrencies. Netflix fell an astonishing 35% on Wednesday, shedding more than $54B in market value, as it reported declines in its subscriber base. 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.
This year, BTC is down 13.4%, and Ether has lost about a fifth of its value, according to CoinMarketCap data. And some names have jumped in value: DeFi darling Terra (LUNA), has weathered recent controversy to gain 8% in 2022. Near Protocol (NEAR) is up nearly 7%, and Monero (XMR) has surged 21%.
Chinese stocks have also taken a beating, with the CSI 300 and Hang Seng indexes sliding as foreign capital and dwindling turnover plague the markets. Top Chinese tech stocks Alibaba, Tencent, and Meituan have each lost more than a quarter of their value in 2022.
Ritesh Samadhiya, strategist at Bank of America, wrote that the renewed losses posted in the Chinese markets are a result of the Covid-19 resurgence causing “lockdowns of key economic hubs.”
Not all cryptocurrencies have weathered the storm of 2022 so well. The DeFi Pulse Index, which tracks several ‘blue-chip’ decentralized finance assets, has fallen almost 37% this year. NFTI, a capitalization-weighted token tracking assets representing the metaverse sector, has also shed 47% since the year began.
The upshot of all this action is a perennial lesson in the markets: big bets on growth can swing suddenly, even in established names such as Netflix.
“People buy growth companies because they think their cash flow is going to grow so they’re paying ahead for anticipating that,” Kim Forrest, CIO of Bokeh Capital Partners, told the Australia Broadcasting Corporation on April 21. “When a stock like this tumbles, people looking for growth back away quickly.”