Bitcoin continued to make new bear market lows and has essentially failed as an inflation hedge. The ongoing recession-like macro environment has dramatically reduced the price per BTC and the share prices of top tech giants across the globe.
In a direct comparison with the Mark Zuckerberg-owned META, the top cryptocurrency by market cap appears to be holding up a lot better than the social media brand.
Bitcoin Buoys Better Than Meta During Recession Onset
Bitcoin was born from the ashes of the last Great Recession. For years, investors wondered what might happen to the speculative asset class of cryptocurrencies when another recession hit, and as of this year they’ve found out.
Monetary tightening by the Fed and rate hikes have hurt most asset prices, including the price per BTC. Once the US Federal Reserve began talking rate increases, the stock market and crypto began dropping.
With the two vastly different asset classes having been in a bear phase for more than a year now, there is a wealth of data available for comparison. Comparing the top cryptocurrency with some of the most important tech brands results in a jarring discover: Bitcoin is holding up better than META by comparison.
META is the parent company of Facebook, Instagram, and other Zuck-owned brands. After making a huge bet on the metaverse, META shares have been in freefall since – with one of the steepest selloffs in all of finance.
META (left) compared with BTCUSD (right) | Source: BTCUSD on TradingView.com
What The Zuck? Comparing Past Crypto Bear Market Drawdowns
Without even measuring, it is clear that META fell much more sharply than Bitcoin with only a brief visual inspection. From peak to the current trough, both plummeted around 77% currently. What’s more notable, is the fact that META share prices fell back to 2015 levels, while cryptocurrencies are trading at the higher end of 2017 and 2018 prices.
But compared to past bear markets, BTC could still have a ways to go. The first ever bear market resulted in a drawdown of 94%, while the 2015 bear market took 86% off the price per coin from peak to trough. In 2018, BTC only dropped 84%, showing a trend of diminishing declines, much like returns are also diminishing.
The data could also infer that because volatility is reducing over time, drawdowns will get less and less severe with each subsequent bear market. What the data doesn’t explain is why META dropped so significantly compared to the speculative asset class.
Compared to other top cryptocurrencies, Bitcoin has also came out the least battered and beaten during the bearish trend. Ethereum wiped out 82% of its face value, while metaverse tokens like Decentraland lost 94% and counting.
Considering BTC is holding up well against all other cryptocurrencies and even some top tech stocks, the first-ever cryptocurrency is showing more resilience than expected during its first-ever recession.
$META, one of the largest publicly-traded tech companies and parent co to some of the largest brands in the world (FB, IG, etc) fell the same amount at $BTC yet #META fell back to 2015 prices, while BTC only fell to 2017/2018 prices. Why is nobody talking about this? #BITCOIN pic.twitter.com/DwoaHRn0lm
— Tony "The Bull" Spilotro (@tonyspilotroBTC) December 5, 2022