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Special Commentary

February 14, 2023

Monthly cryptocurrency and blockchain-related highlights from the Truist Investment Advisory Group


1.     Groundhog day or spring thaw?

  • Groundhog day on February 2nd  witnessed Punxsutawney Phil see his shadow and, according to legend, that means another 6 weeks of winter. That’s the last thing that crypto enthusiasts wanted to hear.
  • Nevertheless, Crypto has rallied this year with other risk assets as markets continue to gauge a deceleration of Fed rate hikes.
  • Part of the January rally in the most liquid and large crypto names, such as bitcoin and ether, is likely due to short covering as bearish futures positions were unwound.

2.  Crypto volumes surge

  • January trading activity saw crypto volumes surge 44% following a decline of 48% in December.
  • Some of the strongest volume spikes were concentrated in the most beaten down assets such as smart contract platform Solana which also saw its price rise by 140% in January.

3.   Politicians compelled to return FTX campaign donations

  • As part of FTX bankruptcy proceedings, new FTX management sent confidential letters to politicians and PACs asking that campaign donations received from FTX be returned by February 28th
  • FTX paid an estimated $70 million in campaign contributions making them one of the largest contributors during last year’s election season.

Chart of the month – Miner’s bounce

Crypto mining company stocks suffered an abysmal 2022, falling an average of 90% as a group. 2022 headwinds included: the transition of Ethereum to a proof-of-stake validation mechanism, ongoing environmental concerns about significant energy consumption and the crypto winter.  Miners are chiefly compensated in the cryptocurrencies they perform transaction validation for and plunging bitcoin prices left them selling bitcoin to pay their bills, adding to bitcoin’s price volatility.

January’s reversal coincided with a rebound in bitcoin prices and record hashrate* levels, often a sign of strength for the sector.

Crypto miners 2022 and January performance

  Marathon Digital: 2022 down nearly 100% -- January up over 100% Riot 2022 down nearly 100% -- January up about 75% Cipher 2022 down nearly 100% -- January up over 100% HIVE 2022 down nearly 100% -- January about 125% Hut 8 2022 down nearly 100% -- January up over 100% Bitfarms 2022 down nearly 100% -- January up over 100% Argo 2022 down about 75% -- January about 75% Iris Energy 2022 down nearly 100% -- January up over 60% Cleanspark 2022 down about 75% -- January up over 50% TeraWulf 2022 down nearly 100% -- January about 40% Greenidge 2022 down nearly 100% -- January nearly 200% Stronghold 2022 down nearly 100% -- January about 15%
Data sources: Truist IAG, Morningstar Direct *Hashrate: how much computing power is used by the network to process transactions

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