crypto strategy

Best Bitcoin and Ethereum strategy in 2022? This report responds

Bitcoin and Ethereum remain stuck in a range with no clear direction during today’s trading session. Crypto market uncertainty has erupted on both long and short positions, but one sector is booming under current conditions.

At the time of writing, Bitcoin is trading at $19,360 with sideways movement across the board. Ethereum is showing similar price action in this choppy environment, with most cryptocurrencies in the top 10 losing or moving sideways.

The price of BTC is moving sideways on the daily chart. Source: BTCUSDT Tradingview

2022 crushes Bitcoin and global markets

According to a report from trading desk QCP Capital, this was the worst year for investors with a multi-asset portfolio. If an investor owned Bitcoin, stocks, and gold as part of their strategy, their capital would be in the red.

As shown in the chart below, the only assets registering gains are those in the energy sector, with crude oil and natural gas leading the way. The former recorded the best performance in 2022 with a positive of 34%, followed by a 4% crude oil (WTI).

The crypto market has been the biggest loser in the current macro conditions. Bitcoin and Ethereum recorded 66% and 72% losses respectively. In traditional markets, only the Nasdaq 100 records a similar drawdown of 40%. QCP Capital wrote:

Outside of energy, the magnitude and correlation of underperformance is astonishing – every macro-financial index is underwater in real terms (…). Today, with all fixed income classes posting negative real yields, there was essentially nowhere you could hide this year and beat inflation.

Bitcoin BTC BTCUSDT Chart 2
Source: QCP Capital

In this environment, bitcoin investors and traditional investors suffered the most negligible losses while preserving their capital in US dollars. The currency hit a 20-year high as measured by the DXY Index (DXY), wreaking havoc among other assets and national currencies.

The only safe haven for BTC and ETH investors

Despite the bear market, the options industry is booming, with its high levels of adoption. Institutional investors recognize that BTC and ETH have perpetual speculative markets driving key options metrics to new highs. QCP Capital added:

(…) Crypto options and open interest (OI) trading volumes have held up so well this year, amid a crypto winter that has seen volumes in other crypto asset classes decline to between 70 and 90 %. In the third quarter, ETH OI options actually broke all-time highs! While BTC OI also held up well.

Bitcoin BTC BTCUSDT Chart 3
Source: QCP Capital

In this choppy and unclear market, the smart money is betting on volatility spikes and collecting premiums in the options industry. The trading company claims that even the “vanilla” strategies managed to generate profits under these conditions.

The status quo in global markets is poised to persist, allowing options traders to preserve their edge in the face of upcoming volatility from macro events.

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