Major cryptocurrencies including Bitcoin and Ethereum have fallen in value since the beginning of October, erasing year-to-date gains. Despite some claims that crypto could replace gold as a stable long-term store of value, the most popular coins continue to behave like speculative assets, exhibiting massive price volatility. Over the past year, Bitcoin exhibited annualized volatility of 47%, while Ethereum volatility was an eyewatering 90%. This compared to 12.6% volatility of the S&P 500.
In this week’s Market Note, we illustrate price changes of BTC and ETH, year-to-date. While it is difficult to accurately attribute recent price declines, it is likely that general macroeconomic uncertainty pressured risk-off moves, including the cautious Federal Reserve stance on interest rates. Additionally, Ethereum suffered a major security breach in November where hackers drained over $100 million across blockchain networks. This sent the price of ETH down -9%, and further fueled fears of crypto platform vulnerabilities.
The Verus Market Note provides market commentary along with relevant charts and graphs. Each week, we highlight a key story from the finance world that we believe will pique your interest. While these insights are meant to inform and enrich your understanding of the current market landscape, they should not be taken as direct recommendations for immediate portfolio adjustments.