2022 was a damaging year for crypto. While the industry has long been recognized for its volatility, a litany of high-profile bankruptcies amid a backdrop of increased regulation and broader instability in the global economy made investment perilous. The Washington Post described it as the  ‘Crypto Winter’ and questioned whether the industry could ever recover. 

Yet the year started so positively. FTX, Coinbase, eToro and Crypto.com spent a combined $39m on Super Bowl ads, using the celebrity power of Matt Damon, LeBron James and Larry David. App downloads for these exchanges rose 279% in the week following the NFL’s season finale. However, the Securities and Exchange Commission (SEC) swiftly rebuffed efforts to regulate the sector, with its chair Gary Gensler proposing powers to treat crypto platforms like financial exchanges.

What followed was a brutal few months for the industry. Bitcoin’s price slumped by 37% during June 2022 — its largest drop in 11 years. Hedge funds and lenders like Three Arrows and Celsius filed for bankruptcy. In November 2022, FTX crashed, sending shockwaves through the market and causing the sector to fall below its $1 trillion valuation.

Crypto insiders remain optimistic about the industry’s future, and Bitcoin’s price rallied by almost 70% since the start of 2023. If the performance of the last 12 months is anything to go by, which coins on the market offer the most stability, and which are the most volatile for investors? To find out, Coin Kickoff has analyzed the price values of every major crypto coin and stablecoin on the market.  

How We Conducted This Study

Using coin price data from CoinMarketCap.com, we compared the annualized volatility of every coin with a market cap of $50M or higher and all stablecoins with a non-zero market cap. We then ranked the top cryptocurrencies and stablecoins based on their performance in the market between April 2022 and April 2023. 

Key Findings

• • UNUS SED LEO (#LEO) is the industry’s most stable crypto coin, with an annualized volatility of 53%.
  • FTX Token (#FTX) is the most unstable crypto coin, with the November 2022 collapse of its currency exchange leading to an annualized volatility of 218.9%.
  • Tether (#USDT) is the most stable stablecoin, with its price fluctuating just 0.88% between April 2022 and April 2023.
  • Venus BUSD (#vBUSD) has an annualized volatility of 90.7%, making it the least stable stablecoin. 

Ongoing FTX Volaitily Makes its Native Token Crypto’s Least Stable Coin

Given the magnitude of collapse by FTX and the shockwaves it sent throughout the market, including the indictment of its disgraced founder and CEO Sam Bankman-Fried, it is not surprising that its native FTX Token (#FTX) came out on top as the most volatile crypto coin in our findings. Between April 2022 and April 2023, it had an annualized volatility of 218.9%, more than any other crypto on the market.

Following the Chapter 11 bankruptcy filing in November 2022, its price dropped by a staggering 138%, and its value continued to fluctuate wildly as allegations unraveled regarding FTX. It recovered briefly in January 2023 as Bankman-Fried pled not guilty to fraud charges in a Manhattan court. Speculation mounted further in April 2023, when FTX’s lead attorney suggested that the cryptocurrency exchange could reopen in the future as it navigates its bankruptcy. 

 

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One currency caught up in the crypto winter was Conflux (#CFX). Dubbed the ‘Chinese Ethereum,’ the startup was backed in 2018 by officials in Shanghai despite a national crackdown on cryptocurrency before expanding into the U.S. and Canada in 2020. It started to make headlines in early 2023 when it announced that users on Chinese social media app Little Red Book could use Conflux NFTs as profile photos, and their position strengthened further amid further backing from investors in China and Hong Kong.  

Mask Network (#MASK) was another volatile coin of 2022. While the cryptocurrency industry bled from the damage of FTX’s titanic collapse, Mask’s price jumped by 50% in November 2022 after currency exchange Binance announced it would be added to its ‘Bluebird’ index, meaning prices of its coins would be leveraged against the market cap.

UNUS SED LEO is Crypto’s Most Stable Currency, Despite Bitfinex Issues

Despite the turmoil in the market, some cryptocurrencies did offer relative stability. Our research shows that UNUS SED LEO (#LEO) had the lowest annualized volatility of any coin, fluctuating by just 53% between April 2022 and April 2023. This is despite a $1.5 million fine by the Commodity Futures Trading Commission to currency exchange Bitfinex, for which #LEO is a native token, in 2021 for illegal transactions on its platform. 

The currency started the year on a high, surging 59% following news that the U.S. Department of Justice recovered $3.6 billion worth of hacked Bitcoin belonging to #LEO’s creator iFinex. This resulted in #LEO’s price rising by more than 50%. However, investors were bearish on the token by the end of 2022, as it had fallen from its high of $8.15 against USD to around $3.90.

 

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Gate Token (#GT) and Bitcoin BEP2 (#BEP2) were the year’s second- and third-most stable cryptocurrencies, with annualized volatility indexes of 55.3% and 60.9%, respectively. Both coins struggled against the market’s instability following the FTX crash, while #BEP2’s price connection to Bitcoin meant it left itself vulnerable to sudden price drops. This included an incident in March 2023 where Bitcoin’s value dropped by 5% in one hour amid concerns about the stability of crypto-friendly bank Silvergate Capital. 

Stablecoins Offer Less Market Volatility — But Choose Carefully

While cryptocurrencies remain a popular choice for investors, stablecoins offer a less volatile alternative by pinning the value of a digital asset to another currency or commodity, usually the U.S. dollar. They offer a more practical alternative to cryptocurrencies, as they are less prone to wild fluctuations in price. This can be seen in our analysis, as all but three stablecoins on the market had a lower annualized volatility than the 53% of #LEO. 

 

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Stablecoins have their own issues, however. Despite market growth to a value of $130 billion by 2021, the SEC continues to scrutinize and regulate the industry to protect investors. Their lower annualized yield means investors are less likely to see any meaningful return in the short term, and it is also possible for a stablecoin to lose its peg if the coin loses sufficient collateral or a major ‘whale’ sell-off takes place. 

While iFinex’s Tether (#USDT) was the most stable of stablecoins in our research, it, too, fell victim to the damage inflicted by FTX’s collapse. Despite an annualized stability of just 0.88% in our analysis, It briefly lost its peg to the U.S. dollar shortly after FTX’s bankruptcy filing in November 2022, further eroding investor confidence in the industry. Tether, the third most popular cryptocurrency, sought to reassure its customers of its stability, and it rebounded quicker than its competitors in early 2023 amid deepening financial woes in the U.S. following the collapse of Silicon Valley Bank. 

Crypto’s Volatile 2022 a Reminder of Investment Fundamentals

As an investor, 2022 was about as stressful as it gets. Traditional stocks and shares varied wildly, with a report finding that 87% of trading days involving S&P 500 shares saw a swing of 1% or more, which hadn’t been seen since the financial crisis of 2008. 

For crypto, the global instability and turbulence of international financial markets wreaked havoc on already unstable prices, with even established players like Bitcoin fluctuating by 61.1%, according to our analysis. You can see our full research in the table below, including all annualized volatility calculations for cryptocurrencies and stablecoins. 

 

 

In many ways, 2022 was crypto’s ‘Icarus’ moment, flying too close to the sun with ambitious Super Bowl ads packed with celebrity clout, only to ‘come crashing down to earth.’ More than $2 trillion worth of assets were wiped out, and the reputation of an industry surrounded in economic skepticism was damaged even further. It brought with it the sharp realization that established players in crypto must do more to win back the trust of investors and policymakers and find a compromise in regulation that creates greater transparency over digital assets. 

It also serves as a reminder of the important fundamentals that we must all consider with investment, staking only what you can afford to lose, thorough research and understanding of the coins you choose to invest in and to diversify your portfolio. Nobody can be sure what the future holds for the cryptocurrency industry, but 2022 is a year that investors will never forget.

To read more about cryptocurrencies and the variety of coins on the market, Coin Kickoff’s helpful guides have the insight you need to understand the sector and invest responsibly.

The Method Behind The Study

To find out which are the most and least stable cryptocurrencies, we compared the volatility of the returns of the top 100 cryptocurrencies by market cap.

First, we retrieved daily data from CoinMarketCap.com for every coin with a market cap of $50M or higher and all stablecoins with a non-zero market cap. Then, we filtered the coins that did not have data for all days 27-04-2022 and 26-04-2023 between or had a 24h volume smaller than $1M. 

Then we calculated the annualized volatility for all coins. We calculated this as the annualized standard deviation of the capital returns, defined as LN (Price today / Price Yesterday). We used these figures to compare all cryptos in terms of the stability of their returns — the higher their annualized volatility, the least stable their returns. 

Finally, we ranked the top cryptocurrencies and stablecoins by how stable they were between 27-04-2022 and 26-04-2023. We only considered cryptocurrencies with a disclosed market cap of more than $1m on 24h volume and presence in the top 100 cryptocurrencies by market cap (excluding stablecoins). 

The data of this analysis is correct as of 26th April 2023.

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