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As 2021 drew to a close, crypto enthusiasts were overflowing with optimism. After all, it had been a banner year: Non-fungible tokens, or NFTs, had entered the mainstream. Casual investors were telling their friends about the relative merits of bitcoin versus ether. Some people have even claimed to understand algorithmic stablecoins.
Fast forward a year, and the main topics of conversation among even the most devout crypto devotees were more likely to be about Sam Bankman-Fried, the disgraced crypto co-founder of the fallen FTX empire, or if they would ever get the coins back. trapped on bankrupt stock exchanges and lending platforms after a series of major digital asset meltdowns.
Crypto winter is the industry term for the chill that hit the market in 2022, and contagion was the name of the game. Following the collapse of algorithmic stablecoin TerraUSD, major crypto players are fell like dominoes: Three Arrows Capital. Voyager Digital, Celsius Network, FTX, BlockFi.
The hits kept coming, but it wasn’t entirely negative at least at first. The Super Bowl, one of the biggest sporting events in the United States, featured flashy, celebrity-filled commercials for crypto companies like Coinbase, Crypto.com, and the aforementioned FTX, which was always on point. There have been crypto conferences in the Bahamas and Miami, with sessions on the future of Bitcoin by day and glitzy parties by night. And the industry’s prominence grew in Washington, as lavish political donations and an army of lobbyists signaled its growing influence there.
Still, crypto prices continued to decline. Bitcoin, the largest token by market value, plunged more than 60%, leading to a digital asset rout that erased some $2 trillion in total market value from highs reached in November 2021. Bankman-Fried moved on from being portrayed as a modern-day John Pierpont Morgan to being arrested and charged with several crimes, including fraud. And NFT prices have come down to earth.
Crypto contraction 2022
The total market value of all digital assets
Celsius freezes withdrawals
Coinbase cuts 18% of its workforce
Three Arrows files for bankruptcy
Voyager Digital files for bankruptcy
Celsius files for bankruptcy
MicroStrategy’s Saylor steps down as CEO
US sanctions Tornado Cash
Alameda co-CEO Trabucco steps down
Kraken’s Powell steps down as CEO
SEC investigates Yuga Labs
Binance says it will sell native FTX tokens
FTX Group files for bankruptcy
Blockfi files for bankruptcy
SBF arrested in the Bahamas; charges filed by SEC, CFTC and DOJ
Celsius freezes withdrawals
Coinbase cuts 18% of its workforce
Three Arrows files for bankruptcy
Voyager Digital files for bankruptcy
Celsius files for bankruptcy
MicroStrategy’s Saylor steps down as CEO
US sanctions Tornado Cash
Alameda co-CEO Trabucco steps down
Kraken’s Powell steps down as CEO
SEC investigates Yuga Labs
Binance says it will sell native FTX tokens
FTX Group files for bankruptcy
Blockfi files for bankruptcy
SBF arrested in the Bahamas;
charges filed by SEC, CFTC and DOJ
Celsius freezes withdrawals
Coinbase cuts 18% of its workforce
Three Arrows files for bankruptcy
Voyager Digital files for bankruptcy
Celsius files for bankruptcy
MicroStrategy’s Saylor steps down as CEO
US sanctions Tornado Cash
Alameda co-CEO Trabucco steps down
Kraken’s Powell steps down as CEO
SEC investigates Yuga Labs
Binance says it will sell native FTX tokens
FTX Group files for bankruptcy
Blockfi files for bankruptcy
SBF arrested in the Bahamas;
charges filed by SEC, CFTC and DOJ
Note: Data through December 20
Source: CoinGecko Market Value Data
One of the central tenets of crypto and blockchain is the idea of decentralization: that no one entity is in charge and no one actor can destabilize the rest. What 2022 has shown, more than once, is that the digital asset ecosystem is significantly more interconnected and concentrated than even its largest participants might have thought.
The Terra ecosystem operated two major tokens: Luna, a cryptocurrency, and TerraUSD (UST), a stablecoin that tried to stay at $1 by maintaining a ratio with the amount of Luna in circulation. In May, the UST began a steady decline away from its dollar peg, eventually dropping both coins to zero. The shockwaves from the implosion reverberated throughout the market, setting the stage for more explosions in the weeks and months that followed.
Crypto CEOs, not a bunch you could ever call timid or retired, are pointing fingers at each other and regulators for the multiple failures that marked the year. Meanwhile, retail investors, some of whom have lost their savings to market wipeouts, hacks or potential fraud, are being left behind, with many wondering if they should have gotten involved in the first place.
Is there a fix for all the ways crypto broke in 2022? Skeptics and fans expect more rules and more regulations, especially in the area of consumer protection. For some, it will be too little too late.
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Sources 2/ https://www.bloomberg.com/graphics/2022-crypto-contagion-from-bitcoin-to-FTX/ The mention sources can contact us to remove/changing this article |
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