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what was the vehicle for Bitcoin.
But as we wrap up the 2022 chapter, the party turned into a nightmare for most. Literally, almost. Because most of the bitcoin supply, which is 19.24 million bitcoins as of this writing, is in a deficit position.
i have wrote before Regarding this trend, we previously found over 50% of the supply to be in a deficit position, as the chart above shows. But after a break, the market fell again after a certain banker exposed his Mr. Fried.
But it’s a pretty sobering statistic considering Bitcoin was the world’s best performing asset class for the decade from 2011 to 2021. Last year it exploded from a fraction to nearly $69,000, making many people very rich.
But for those who said yes during the pandemic, the story could be very different. Extending the chart above over the past decade reveals the ups and downs.
One thing that is clear is that for the first time in Bitcoin’s history, the broader economy is experiencing a bear market.
Bitcoin, which started in 2009, enjoyed one of the longest and most explosive bull markets in financial history until 2022. The S&P 500 has returned 7x from its lows during the Great Financial Crisis to its early 2022 levels, making it very risky across the board.
This year has been full of scandals and idiosyncratic risks in the crypto industry. Bitcoin plummeted due to the broader macro environment mocking the notion of not being an asset. CoinJournal Director Max Coupland said in assessing Bitcoin’s 2022 price action:
In this regard, plotting Bitcoin price levels against the S&P 500, everything looks healthy. The only thing is that we have removed the chart at the beginning of 2022.
The chart below does the same – plots the S&P 500 against Bitcoin. This time, the focus is on 2022, which shows that both the stock market and Bitcoin have plummeted.
Of course, the story of Bitcoin being uncorrelated is dead dead. Not only that, but the fallacy of concluding that Bitcoin is an inflation hedge has been proven foolish.
There is no other way to say it. Bitcoin trades like a risky asset.
In fact it’s trading like a very risky asset and it was the best performing decade from 2011 to 2021 when the market surged and all these risky assets posted meteoric gains Not only was it an asset, it is now experiencing its flip side. , which has done worse than most.
It has retreated so significantly that the earnings that have claimed the title of best performing asset are not enough to prevent the fact that the majority of supply is held by investors in loss positions.
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On-chain data supplied via glass node
S&P 500 and Bitcoin price data Yahoo Finance
Bitcoin was the best performing asset class from 2011 to 2021. Yahoo Finance
