The year 2022 proved to be a disruptive period for the cryptocurrency market. While volatility has long been a hallmark of the industry, a series of high-profile bankruptcies against a backdrop of increased regulatory scrutiny and global economic instability made investing particularly precarious. Major news outlets described it as a "crypto winter," questioning whether the sector could ever recover.
However, the year began on a surprisingly positive note. Major crypto exchanges collectively invested millions in Super Bowl advertisements, leveraging celebrity endorsements to attract new users. These campaigns led to a significant surge in app downloads immediately following the event.
Yet regulatory bodies quickly pushed back. Key figures proposed expanding the powers of financial regulators to oversee crypto platforms similarly to traditional financial exchanges.
The subsequent months were brutal for the industry. Bitcoin’s price fell dramatically, recording its largest drop in over a decade. Several prominent hedge funds and lending firms filed for bankruptcy. The collapse of a major exchange in November 2022 sent shockwaves throughout the market, causing the entire industry’s valuation to fall below a key threshold.
Despite the turmoil, industry insiders remained optimistic. Bitcoin’s price recovered significantly in early 2023. This analysis examines which cryptocurrencies demonstrated the most and least stability over the past year.
How We Conducted This Research
Using comprehensive market data, we compared the annualized volatility of every coin with a market capitalization of at least $50 million and all stablecoins with non-zero market caps. We then ranked top cryptocurrencies and stablecoins based on their market performance between April 2022 and April 2023.
Key Findings
- UNUS SED LEO (#LEO) emerged as the most stable cryptocurrency with an annualized volatility rate of just 53%.
- FTX Token (#FTT) ranked as the most volatile cryptocurrency with an annualized volatility of 218.9% following its exchange's collapse in November 2022.
- Tether (#USDT) proved the most stable stablecoin with price fluctuations of merely 0.88% between April 2022 and April 2023.
- Venus BUSD (#vBUSD) recorded annualized volatility of 90.7%, making it the least stable stablecoin.
Ongoing FTX Volatility Made Its Native Token Cryptocurrency's Most Unstable Coin
Given the scale of FTX's collapse and the shockwaves it sent throughout the market—including legal actions against its founder—the native FTX Token (#FTT) unsurprisingly emerged as the most volatile cryptocurrency in our findings. Between April 2022 and April 2023, it recorded annualized volatility of 218.9%, exceeding any other cryptocurrency.
After filing for bankruptcy protection in November 2022, its price dropped dramatically and continued to swing wildly as new allegations surfaced. The token experienced brief price recoveries amid legal developments and speculation about the exchange's potential reopening during bankruptcy proceedings.
Conflux (#CFX) was another casualty of the crypto winter. Dubbed "China's Ethereum," the project initially launched with government backing before expanding internationally. It gained renewed investor interest in early 2023 when it announced integration with a major Chinese social media platform, allowing users to implement Conflux NFTs as profile pictures.
Mask Network (#MASK) experienced significant volatility during 2022. While most of the cryptocurrency market bled value following FTX's collapse, Mask's price actually jumped 50% after a major exchange announced it would include the token in its index fund, meaning its price would be affected by market capitalization movements.
Despite Bitfinex Issues, UNUS SED LEO Remained Cryptocurrency's Most Stable Coin
Despite market turbulence, some cryptocurrencies provided relative stability. Our research revealed UNUS SED LEO (#LEO) had the lowest annualized volatility of any coin, fluctuating just 53% between April 2022 and April 2023. This stability persisted despite regulatory actions against its native exchange.
The token surged dramatically in early 2022 when news broke that authorities had recovered billions in Bitcoin stolen from the token's creators years earlier. This development caused #LEO's price to increase over 50%. However, investor sentiment turned bearish by year's end, and the token fell significantly from its highs.
GateToken (#GT) and Bitcoin BEP2 (#BTCB) ranked as the second and third most stable cryptocurrencies, with annualized volatility rates of 55.3% and 60.9% respectively. These coins struggled with market instability following FTX's collapse, with #BTCB's price connection to Bitcoin making it particularly vulnerable to sudden price drops, including a 5% decline in one hour during banking sector concerns in March 2023.
Stablecoins Offer Reduced Market Volatility—But Choose Carefully
While cryptocurrencies remain popular with investors, stablecoins provide a less volatile alternative by pegging digital asset values to another currency or commodity, typically the US dollar. Stablecoins prove more practical for transactions since they're less susceptible to dramatic price fluctuations. Our analysis confirms this, showing that all but three stablecoins had lower annualized volatility than #LEO's 53%.
However, stablecoins present their own challenges. Despite massive market growth, regulators continue scrutinizing the sector to protect investors. Stablecoins typically offer lower annualized yields, meaning investors shouldn't expect meaningful short-term returns. There's also risk that stablecoins can lose their peg if they become undercollateralized or experience significant "whale" sell-offs.
Although Tether (#USDT) ranked as the most stable stablecoin in our research, it wasn't immune to FTX's collateral damage. Despite showing just 0.88% annualized stability in our analysis, it briefly lost its dollar peg immediately following FTX's bankruptcy filing in November 2022, further weakening investor confidence. As the third most popular cryptocurrency, Tether moved quickly to assure customers of its stability and rebounded faster than competitors during early 2023's banking crisis.
Cryptocurrency's 2022 Volatility Reminds Investors of Fundamentals
For investors, 2022 was a stressful period across markets. Traditional stocks experienced significant swings, with one report finding that 87% of trading days involving S&P 500 stocks saw movements of 1% or greater—a frequency not seen since the 2008 financial crisis.
For cryptocurrencies, global instability and financial market turbulence wreaked havoc on already volatile prices. Our analysis shows even established coins like Bitcoin fluctuated by 61.1%. You can view our complete research in the tables below, including all annualized volatility calculations for both cryptocurrencies and stablecoins.
In many ways, 2022 represented an Icarus moment for cryptocurrency, with over $2 trillion in assets disappearing and industry reputation suffering serious damage. The year brought renewed skepticism from investors and policymakers alike, creating a sobering recognition that established players must work harder to regain trust and find a path toward regulatory compromise that creates greater transparency for digital assets.
The volatility also reminded investors of crucial fundamentals: only invest what you can afford to lose, thoroughly research any coins you choose to invest in, and diversify your portfolio. While nobody can predict cryptocurrency's future with certainty, 2022 remains a year investors won't soon forget.
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Frequently Asked Questions
What makes a cryptocurrency stable or unstable?
Cryptocurrency stability depends on multiple factors including market capitalization, trading volume, real-world utility, regulatory environment, and investor sentiment. Stablecoins achieve price stability by pegging their value to external assets like fiat currencies, while traditional cryptocurrencies fluctuate based purely on market supply and demand dynamics.
How is cryptocurrency volatility measured?
Volatility is typically measured as the standard deviation of logarithmic returns over a specific period, annualized to allow comparison across different time frames. Higher annualized volatility percentages indicate greater price instability and risk, while lower percentages suggest more predictable price movements.
Should investors avoid volatile cryptocurrencies completely?
Not necessarily. While high volatility increases risk, it also creates potential for higher returns. The key is understanding your risk tolerance and investing appropriately. Many investors balance high-volatility assets with more stable investments to create diversified portfolios that match their financial goals and risk appetite.
What are the advantages of stablecoins?
Stablecoins offer several advantages including price stability for transactions, protection against market volatility, easier valuation compared to traditional cryptocurrencies, and utility for transferring value quickly without traditional banking intermediaries. They're particularly useful for traders moving between positions without converting to fiat currency.
How did FTX's collapse affect cryptocurrency volatility?
FTX's bankruptcy significantly increased volatility across cryptocurrency markets as it eroded investor confidence, triggered liquidations, exposed interconnected risks between companies, and prompted increased regulatory scrutiny. The exchange's native token became essentially worthless while major cryptocurrencies experienced heightened price swings throughout the crisis.
Can stablecoins lose their peg permanently?
Yes, stablecoins can permanently lose their peg if they become significantly undercollateralized, if redeeming mechanisms fail, if regulatory action prevents operations, or if market confidence collapses entirely. While major stablecoins have historically recovered from temporary depegging events, permanent failure remains a possibility that investors should consider.
Research Methodology
To identify the most and least stable cryptocurrencies, we compared return volatility among the top 100 cryptocurrencies by market capitalization.
We gathered daily price data for all coins with market capitalization of at least $50 million and all stablecoins with non-zero market caps. We filtered out coins missing data between April 27, 2022 and April 26, 2023 or with 24-hour trading volume below $1 million.
We then calculated annualized volatility for all qualifying coins. This was computed as the annualized standard deviation of logarithmic returns, defined as LN(today's price/yesterday's price). We used this data to compare return stability across cryptocurrencies—higher annualized volatility indicates less stable returns.
Finally, we ranked top cryptocurrencies and stablecoins based on their stability between April 27, 2022 and April 26, 2023. We only considered cryptocurrencies with disclosed market capitalizations over $1 million (by 24-hour trading volume) that entered the top 100 by market capitalization (excluding stablecoins).
This analysis incorporated data through April 26, 2023.