Bitcoin had a bad weekend and may not be the best crypto in 2022

The leading cryptocurrency slumped more than 20% following Friday's stock market decline

Bitcoin had a bad weekend and may not be the best crypto in 2022
Steve Randall

Investors who opted to use Bitcoin as a hedge against stock market volatility had a wake up call over the weekend.

A disappointing US jobs report and the rise of the Omicron COVID variant saw global stocks decline; the TSX/S&P Composite Index closed down almost 129 points Friday.

Rather than offering a safe haven for investors, Bitcoin declined and continued to trade lower over the weekend, with a near 30% loss peak-to-trough on Saturday and further decline through early Monday. At the time of writing, its price is $36,289.

“The decline was likely in part technically-driven, exacerbated by the derivatives market, and not helped by the downside momentum behind high-growth stocks on Friday, to which Bitcoin has been positively correlated,” Katie Stockton, founder and managing partner of Fairlead Strategies wrote in a client note.

Good year 

Nigel Green, CEO of global financial advisory firm deVere Group says that crypto investors have still had a good year.

“End of the week trading was hit by negative sentiment of high-growth stocks, which went on to impact Bitcoin, which, in turn, weighed on the wider crypto market,” he said. “Despite this current volatility, crypto investors who have consistently stayed in the market have generally had a positive year. Year-to-date Bitcoin is up 46%, Ether 376%, and Solana around 13,000%.”

But, looking ahead to 2022, Green says that it may not be Bitcoin that provides the best returns, with Solana’s strong showing this year set to continue.

What is Solana?

“I’m confident that a key one to watch in 2022 is Solana, currently the fifth largest crypto by market cap. It started off the year trading at around $2, now it’s changing hands on the deVere Crypto app for about $200. It’s likely it will outperform both Bitcoin and Ethereum again next year,” he said.

Green believes that Solana’s technology and cost-effectiveness will drive its success.

“Solana is a blockchain platform that has superior high transaction speeds, processing over 2,500 transactions per second - main rival Ether’s is 15 – and at a lower cost and without compromising decentralisation,” he explained. “Like Ether, it supports smart contracts, which are algorithms that are designed to operate automatically based on predefined agreements on blockchain technology.”

He noted that many decentralized finance (DeFi) applications are moving to Solana, especially given its cheaper fees.

However, it hasn’t all been good for the burgeoning platform, which was offline for about 17 hours earlier this year. Although Solana said this was due to a surge in transactions.

“It’s a young network still and this was just a temporary glitch,” Green said. “There’s no reason why it shouldn’t again outperform headline grabbers Bitcoin and Ethereum next year if the current momentum continues. 2022 will be Solana’s breakout year.”

LATEST NEWS