Tech
Don’t look now, but cryptocurrencies are outperforming tech stocks
Cryptocurrencies may not be the most volatile asset class of 2022 after all.
Many top tech stocks have suffered year-to-date declines this year. While Bitcoin, Ether and other major tokens have tracked the performance of tech names in recent quarters, they now appear to be sliding even further into this punishing period, according to data from TradingView.
Pandemic outperformers, including Netflix, Meta, PayPal, Shopify and Zoom, have fallen from their all-time highs as investors have become increasingly risk-averse amid the threat of inflation, interest rate rises and geopolitical danger derived from The Russian invasion of Ukraine. The Nasdaq 100 index of tech names is down nearly 17% this year, but many of the most popular names are down double digits.
One day drop
Some behave in ways more closely associated with crazy cryptocurrencies. Netflix fell a stunning 35% on Wednesday, losing more than $54 billion in market value reported decreases in its subscriber base. By comparison, Bitcoin’s worst daily decline was around 40% on March 12, 2020, but it was triggered by the first wave of the Covid-19 pandemic and was part of a broader sell-off affecting all markets.
This year, BTC has fallen 13.4% and Ether has lost about a fifth of its value, according to CoinMarketCap data. And some names increased in value: DeFi darling Terra (LUNA) held firm recent controversy with an 8% gain in 2022. Near Protocol (NEAR) is up nearly 7% and Monero (XMR) is up 21%.
FAANG index showing Facebook, Apple, Alphabet, Netflix and Amazon stocks. Source: TradingView
Chinese stocks did too got a beating, with the CSI 300 and Hang Seng indexes falling as foreign capital and declining revenue plague markets. Top Chinese tech stocks Alibaba, Tencent and Meituan have each lost more than a quarter of their value in 2022.
Bank of America strategist Ritesh Samadhiya he wrote that the renewed losses recorded on the Chinese markets are the result of the resurgence of Covid-19 which caused the “blockade of the main economic centers”.
DeFi Laggards
Not all cryptocurrencies have weathered the storm of 2022 so well. The DeFi Pulse Index, which tracks several ‘blue chipsDecentralized financial assets have declined by nearly 37% this year. NFTI, a cap-weighted token that tracks assets representing the metaverse sector, has also lost 47% since the start of the year.
The upshot of all this is a perennial lesson in markets: Big growth bets can change suddenly, even at established names like Netflix.
“People buy growing companies because they think their cash flow will increase, so they pay up front to get ahead of it,” Kim Forrest, CIO of Bokeh Capital Partners, said the Australia Broadcasting Corporation on April 21. “When a stock like this collapses, people looking for growth quickly turn away.”