Bitcoin’s year-to-date 60% correction looks negative, but many stocks have fallen even further

The price drops of Bitcoin (BTC) and Ether (ETH), of 60% and 66% respectively, are attracting a lot of criticism from cryptocurrency critics and perhaps this is deserved, but there are also many stocks with similar performance, if not worse.

The strong volatility observed in cryptocurrency prices is partly driven by the insolvency of major centralized lending and return platforms, the bankruptcy of Three Arrows Capital, and a handful of exchanges and mining pools facing liquidity problems.

For cryptocurrencies, 2022 was definitely not a good year and even Tesla sold 75% of its Bitcoin holdings in the second quarter at a loss. The nearly-trillion-dollar company still holds a $ 218 million position, but the news certainly didn’t help investor perceptions of companies’ adoption of Bitcoin.

Cryptocurrencies aren’t the only assets hit by central banks as they withdraw stimulus measures and raise interest rates. A handful of multi-billion dollar companies around the world also suffered, with losses exceeding 85% in 2022 alone.

Cash-starved companies have experienced sharp drops in their share price

Unlike cryptocurrencies, companies, especially those listed on the stock markets, rely on financing, regardless of whether the money is used for mergers and acquisitions or day-to-day operations. This is why interest rates set by central banks have a dramatic impact on debt-intensive sectors such as energy, auto sales and technology.

Saipem (SPM.MI), an Italy-based oil and gas exploration and engineering services provider for offshore and onshore projects, saw its shares decline by 99.4% in 2022. The company suffered severe losses of over a third of its 2021 capital and was in dire need of cash to stay afloat as capital costs soared as interest rates rose.

Uniper (UN01.DE), a German energy company with over 10,000 employees, suffered severe damage after the suspension of the Nord Stream 2 pipeline project, forcing a € 15 billion bailout in July 2022. ‘energy continued to rise, Uniper was unable to fulfill its contracts and was nationalized by the German government in September 2022. The result was a 91.7% decline in the stock year to date, down from a valuation of $ 14.5 billion.

Cazoo Group Ltd (CZOO) currently holds a market capitalization of $ 466 million, but the auto dealer was valued at $ 4.55 billion by the end of 2021, a 90% loss. However, the UK-based company thrived during the restrictions imposed during the lockdowns by offering a way to trade and rent cars online. Likewise, US auto dealer Carvana (CVNA) saw an 87% drop in its share price.

Biotech companies I-Mab (IMAB) and Kodiak Sciences (KOD) lost 90% of their value in 2022. China-based I-Mab saw its shares sharply adjusted after its partner AbbVie discontinued its drug trial for the treatment of cancer. Previously, the biotech company could receive up to $ 1.74 billion in success-based payments. North American Kodiak Sciences also faced a similar fate after its lead drug failed in its Phase 3 clinical trial.

The technology sector relies on growth, which has not happened

Software services have been another industry deeply affected by lower growth and rising hiring costs. For example, Kingsoft Cloud Holdings (KC), a China-based cloud service provider, posted a net loss of $ 533 million in the first quarter of 2022, followed by an even greater deficit in the next three months of $ 803 million. dollars. As a result, its shares fell 87.6% year-to-date through September 22.

Other examples in the tech industry include Tuya Inc. (TUYA), an artificial intelligence and Internet of Things service provider. The company’s stock plummeted 83.7% in 2022 despite a successful $ 915 million rise in March as second-quarter revenue fell 27% from a year earlier. Tuya has also racked up $ 187.5 million in losses over the past 12 months.

A handful of other tech companies saw corrections of 80% or larger in 2022, including Cardlytics (CDLX), Bandwidth (BAND), Matterport (MTTR), and Zhihu (ZH). Each of these examples had a market capitalization of $ 1.5 billion or more by the end of 2021, so these losses are not to be ignored.

There is nothing to complain about Bitcoin’s lackluster performance, especially considering that many thought its digital scarcity would be enough to withstand a turbulent year. However, it cannot be said that the stock market has fared much better, adjusting to historical volatility and gains in 2021.

As a result, volatility and sharp corrections are not unique to the industry, and investors cannot simply push back digital assets due to a 60% or 70% decline in 2022.