2022 - The Year in Crypto MarketsHi Traders, Investors and Speculators 📈📉
Ev here. Been trading crypto since 2017 and later got into stocks. I have 3 board exams on financial markets and studied economics from a top tier university for a year. Daytime job - Math Teacher. 👩🏫
2022 has not been the best year for cryptocurrencies. Infact, many popular news outlets are proclaiming that 2022 was the death of crypto. Or that it could be, atleast.
As if a long, dry, crypto winter wasn't bad enough, we watched as the market started to unravel at its seams. The first major shockwave that hit the market, was the collapse of LUNA and stablecoin Terra. (Ofcourse the Federal Reserve's interest rate hikes weren't helping either.) The crypto industry in TOTAL is a highly connected and integrated market. It is therefore no surprise, that when LUNA crashed, many companies had suffered serious losses from which they could not recover. Celsius had roughly 1.7 million customers and more than $10 billion in assets, but the market conditions ultimately led them to bankruptcy. Many people on the Terra platform had taken out loans in the stablecoin and used LUNA as collateral. When LUNA's value began to drop along with the overall market decline, it impaired the collateral for many of the stablecoin loans. Many of the borrowers, in turn, couldn't repay these loans because they had used the stablecoins to purchase other investments that had themselves dropped in value. The interconnections among all of these transactions amounted to a 'death spiral' that dragged down LUNA and TerraUSD simultaneously and had negative effects on many investors' portfolios.
Remember that back in March, the year's first major hackers hit the market. Hackers targeted the Ronin network, which supports Axie Infinity blockchain gaming platform, and stole $625 million, making it the largest cryptocurrency theft to date. It didn't stop there. Many other major crypto platforms, such as Binance and FTX, were also hacked in 2022, making it the year with the most hacks and highest amounts stolen up to date.
Confidence in crypto markets continued to decline, and then shocking revelations around FTX and sister company Alameda Research came to light in a November CoinDesk article. Binance CEO CZ immediately and publicly expressed concerns around FTX's solvency and ability to sustain its self-issued token, FTT . Traders began to withdraw funds from FTX. The FTT price fell from roughly $26 to $1 in just a few days and FTX paused customer withdrawals. FTT was discovered to be insolvent, having misused customer deposits and funds. FTX filed for bankruptcy protection in late November. The previous bailout of BlockFi was reversed and BlockFi was back into bankruptcy court. Crypto markets crashed, again.
It is important to note that the failures we’ve seen this year have NOT been caused by a failure of the underlying blockchain technology. Ethereum underwent a successful upgrade in 2022, transitioning from a proof-of-work blockchain to a proof-of-stake blockchain. The tokenomics of Ethereum have also changed significantly, which many believe will benefit the future of the ETH ecosystem.
2023 may start bleak, considering talks of a recession, cryptocurrency regulations and the fact that many cryptocurrency companies and their founders are facing bankruptcy and even the threat of imprisonment. But, the future of blockchain remains! Crypto will survive, because it is revolutionary and as a wise businessman once said - If you want to be successful, invent something that makes the previous version absolute.
🎁 And remember, from all of us at CryptoCheck 🎁
🎁Happy 🎁 Festive Season ✨
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