In this article, we discuss the 10 cryptocurrencies that performed poorly during the crypto crash of 2022. If you want to skip our detailed analysis of the crypto market heading into 2022, go directly to Crypto Crash 2022: Top 5 Losers in January.
In January 2022, Bitcoin, Ethereum, and all major cryptocurrencies dropped by 10% or more, and on January 21, the cryptocurrency market cap declined by $205 billion within a span of 24 hours. The major market indices also crashed, and were treading the correction territory at the period too.
Paul Krugman, a Nobel Prize-winning economist, has warned investors about the growing volatility of the cryptocurrency market, and found it comparable to the subprime mortgage crisis of 2007. He believes that investors gave into the crypto hype of 2021, without truly understanding the risks at stake, and put their money into assets which are speculative at best. Krugman is a vocal crypto bear, and he has been known to describe cryptocurrency as a new-age Ponzi scheme. Data on January 28 suggested that the crypto market is worth $1.7 trillion, down from its all-time high of $3 trillion.
Like all other sectors and markets, the crypto crash of 2022 is associated with the uncertainty brought forward by new COVID-19 variants, and it is unknown for now whether most retail crypto investors lean towards buying the dip or cutting their losses and selling out.
Peter Johnson, Jump Crypto Partner and DeFi Alliance Founding Partner, joined CNBC on January 8 and stated that Bitcoin is because is perceived as a risk asset currently, and investors are getting into the futures market, which requires liquidation of assets. However, he believes that there are positive catalysts for crypto in 2022. He noted that the macro inflationary backdrop is a good sign for Bitcoin, and the billions of dollars worth of capital that is ready to be deployed into crypto hedge funds will also enable positive movement in the crypto space. He also stated that with world-class talent being poured into crypto, the market will definitely rebound soon.
Brandon Krieg, the chief executive officer of the investment manager Stash, advised traders to buy the crypto dip, and invest in safe currencies like Bitcoin and Ethereum. The ‘smart portfolio’ at his firm allows exposure to crypto, in a way that crypto consists of between 4%-6% of a core portfolio. He stated that his clients invest small amounts in crypto over the long-term, so the price fluctuations do not hurt their gains immensely.
Although the crypto market crashed dramatically in 2022, enthusiasts and early-bird crypto traders have not pulled out their funds since they are focused on the bigger picture. However, investors who would like to remain on the safer side amid the crypto crash can invest in stable companies like Microsoft Corporation (NASDAQ:MSFT), PayPal Holdings, Inc. (NASDAQ:PYPL), and Meta Platforms, Inc. (NASDAQ:FB).
We chose cryptocurrencies which are circulated in the market commonly and calculated their price fluctuations in January 2022. We chose the 10 cryptocurrencies which declined the most in January.
Crypto Crash 2022: Top Losers in January
10. Harmony (ONE)
Decline in Price in January 2022: 30.2%
Harmony is a blockchain platform that allows developers to build decentralized applications, allowing the creation of blocks in seconds. Harmony was created in 2017 by Dr. Stephen Tse, who has previously worked as a software engineer at Alphabet Inc. (NASDAQ:GOOG) and Apple Inc. (NASDAQ:AAPL). Dr. Tse, along with a few of his former colleagues, founded Harmony, with a unique focus on processing speed and validation.
The native token of Harmony is ONE, whose price in January 2022 fell 30.2%, and it was one of the top crypto losers in January. Harmony is an advanced blockchain platform, providing an upgraded version of the proof-of-stake consensus mechanism, namely effective proof-of-stake (EPoS), which enables faster processing times and improved scalability. The opening price for ONE on January 1 was $0.2676, whereas the coin closed on January 31 at $0.1866.
Additionally, Harmony has huge potential to gain from non-fungible tokens, since the platform is fully Ethereum-compatible and supports multiple NFT standards. Several NFT platforms and campaigns have been launched on Harmony. An NFT marketplace, namely daVinci Marketplace, was launched on the Harmony Platform in April 2021.
Controlled exposure to crypto in this market is recommended, hence investors should also seek out companies like Microsoft Corporation (NASDAQ:MSFT), PayPal Holdings, Inc. (NASDAQ:PYPL), and Meta Platforms, Inc. (NASDAQ:FB) for a balanced portfolio.
9. Yearn.finance (YFI)
Decline in Price in January 2022: 31.8%
Yearn.finance is an aggregator service that aims to simplify decentralized finance applications for amateur investors, by leveraging automation to optimize profits during yield farming. Yearn.finance launched in February 2020, and its in-house token YFI went live in July 2020.
Yearn.finance was created by Andre Cronje, a South African DeFi architect who has also worked at Ethereum, Fantom, and FUSION Foundation. Yearn.finance experienced relatively quick success, with assets under total value locked exceeding $1 billion in September 2020. Andre Cronje has publicly stated that dynamic market conditions can result in losses for Yearn.finance investors, and the platform is not fully secure despite code audits, since the DeFi ecosystem involves inherent risk.
The YFI coin supply is capped at 30,000, and the majority of the supply is currently in circulation. YFI hit its all-time high price of $41,000 in mid-September 2020, effectively becoming the first crypto worth more than Bitcoin (BTC) per unit at the time. However, during the crypto crash of 2022, YFI’s price dropped by 31.8%, making it one of the top crypto losers in January.
8. Polygon (MATIC)
Decline in Price in January 2022: 36.1%
Polygon is a structured and simplified blockchain platform used for Ethereum scaling and infrastructure development. Polygon offers a modular, flexible framework that is designed to create several applications. Polygon allows developers to build multi-chain systems, similar to the internet of blockchains concept, and these multi-chain systems offer security and a community that is similar to the Ethereum ecosystem.
Polygon was launched in October 2017, by creators Jaynti Kanani, Sandeep Nailwal, and Anurag Arjun, with two of them being experienced blockchain developers and one a business consultant. The native coin of Polygon is MATIC, which has a maximum supply of 10 billion coins, and 4.8 billion MATIC coins are currently in circulation.
What makes Polygon unique is its scalability and instant blockchain transactions. In addition to that, the platform employs a custom Plasma network for security, which uses the proof-of-stake mechanism and enables 65,536 transactions per block.
In January 2022, MATIC’s price dropped by 36.1%, making it one of the worst performing cryptos. While the token started trading at $2.57 on January 1, on January 31, the price of MATIC had lowered to $1.64.
7. Shiba Inu (SHIB)
Decline in Price in January 2022: 37.2%
Shiba Inu was launched in August 2020 by an anonymous group called Ryoshi, and its native token SHIB has been widely categorized as a meme coin. SHIB was marketed as the “Dogecoin Killer”, and gained popularity when Tesla, Inc. (NASDAQ:TSLA)’s Elon Musk tweeted about the coin. Shiba Inu’s viral success led to several copycat coins originating in the market.
Shiba Inu’s logo is a dog, and this has inspired dog-themed non-fungible tokens from around the world, successfully bringing the SHIB community into the NFT market.
Shiba Inu is a meme coin that made it to the top performing crypto list in 2021, but its high performance was mainly due to the coin’s increased visibility and social media hype. In January 2022, SHIB’s price fell by 37.2%, a significant decline compared to its enormous highs in 2021.
6. Avalanche (AVAX)
Decline in Price in January 2022: 38.6%
Avalanche is the fastest smart contract blockchain platform that was launched in September 2020, and the native token is called AVAX. Avalanche is a low-cost and eco-friendly platform.
Deloitte, a British multinational professional services firm, announced on November 22 that it is partnering with Ava Labs, the creator of Avalanche, to use Avalanche’s blockchain platform to carry out quicker and more efficient disaster relief programs.
Although AVAX gained over 2800% in 2021 and remained one of the top performing cryptos, it fared poorly amid the 2022 crypto crash, and the price declined 38.6% in January 2022.
Investors seeking to maintain a relatively safe portfolio in the midst of the crypto and stock market crashes can hold stocks like Microsoft Corporation (NASDAQ:MSFT), PayPal Holdings, Inc. (NASDAQ:PYPL), and Meta Platforms, Inc. (NASDAQ:FB) for lesser exposure to volatility.
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Disclosure: None. Crypto Crash 2022: Top 10 Losers in January is originally published on Insider Monkey.