Bitcoin’s 60% correction so far looks bad, but many stocks are down by more

The painful 60% and 66% slump in Bitcoin (BTC) and Ether (ETH) prices is prompting a lot of criticism from crypto pundits and it is probably deserved, but there are also plenty of stocks out there with similar, if not worse, performance.

The sharp fluctuations in cryptocurrency prices have been driven in part by major central yield and lending platforms becoming insolvent, the bankruptcy of Three Arrows Capital, and a few exchanges and mining pools facing liquidity issues.

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 trillion-dollar company still holds a $218 million position, but the news certainly hasn’t helped investors’ perceptions of Bitcoin adoption.

Cryptocurrencies are not the only assets affected by central banks withdrawing stimulus measures and increasing interest rates. A handful of multi-billion dollar companies around the world have also suffered, with losses of more than 85% in 2022 alone.

Liquidity-starved companies have seen their stock prices plummet

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

Saipem (SPM.MI), an Italy-based company providing oil and gas exploration and exploration services for offshore and onshore projects, saw its shares drop by 99.4% in 2022. The company incurred heavy losses of more than a third of its shares in 2021 and was in dire need of cash. To stay afloat as capital costs rise as interest rates rise.

Uniper (UN01.DE), a German energy company with more than 10,000 employees, faced severe handicaps after the suspension of the Nord Stream 2 gas pipeline project, which led to a 15 billion euro bailout in July 2022. However, as energy prices continue On the rise, Uniper started unable to honor its contracts and was nationalized by the German government in September 2022. The result was a 91.7% drop in shares so far, down from a valuation of $14.5 billion.

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

Biotech companies I-Mab (IMAB) and Kodiak Sciences (KOD) lost 90% of their value in 2022. China-based I-Mab saw a sharp correction in its stock after its partner AbbVie halted its trial of a cancer drug. Previously, the biotech company was eligible to receive up to $1.74 billion in payments based on success. North American company Kodiak Sciences also faced a similar fate after its main drug failed in a Phase 3 clinical trial.

The technology sector depends on growth, which has not happened

Software services were another sector that was hit hardest by lower growth and increased hiring costs. For example, China-based Kingsoft Cloud Holdings (KC), a cloud service provider, reported a net loss of $533 million in the first quarter of 2022, followed by an even larger deficit over the following three months at $803 million. Hence, its shares are trading at 87.6% year-to-date as of September 22nd.

Another example in the technology sector is Tuya Inc. (TUYA), a company that provides artificial intelligence and Internet of Things services. The company’s shares fell 83.7% in 2022 despite successfully raising $915 million in March, as second-quarter revenue was down 27% from the previous year. Toya has also accumulated $187.5 million in losses over the past 12 months.

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

There is no lackluster performance for Bitcoin, especially given that many believed that its digital scarcity would be enough to withstand a turbulent year. However, one cannot say that the stock market has performed much better, adjusting to historical volatility and gains in 2021.

Thus, fluctuations and sharp corrections are not limited to the sector, and investors cannot simply dismiss digital assets due to a decline of 60% or 70% in 2022.