• Bitcoin performance in 2022 was the second-worst since 2011, with a year-to-date performance of -65%.
• According to Arcane Research, the crypto winter was caused by tightening macroeconomic conditions and crypto-specific leverage and risk management.
• Arcane Research predicts that Bitcoin will trade in a mostly flat range in 2023, but finish the year with a higher price than it started with.

Bitcoin, the digital gold, has had a tumultuous 2020 and 2021. With the current price, Bitcoin has had a year-to-date (YTD) performance of -65%, the second-worst since 2011. This underperformance is a stark contrast to the performance of physical gold, which has a YTD performance of -1%. According to Arcane Research, the crypto winter was caused by tightening macroeconomic conditions and crypto-specific leverage and risk management by core market participants.

The two major events that caused Bitcoin to underperform in 2022 were 3AC and Celsius in June, and FTX in November. These events likely had a large impact on Bitcoin prices, as the digital gold was highly correlated with the U.S. equity markets.

Arcane Research predicts that contagion effects will continue in early 2023, but expects that the majority of 2023 will be less frantic and borderline uneventful compared to the last three years. They also expect Bitcoin to trade in a mostly flat range in 2023, but for the price to finish higher than it started.

This prediction is in stark contrast to the events that occurred in 2022, but is a testament to the resilience of Bitcoin and the digital gold narrative. Although Bitcoin prices may not rise as quickly as many would like, it is still expected to finish 2023 with a higher price than it started with. This is good news for anyone holding Bitcoin and looking to make a return on their investment.