Crypto Winter 2022 Throwback: The SA Editors Who Correctly Labeled the Bitcoin Crash

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The reputations of cryptocurrency champions have been hit hard in one of the industry’s worst years, but some Seeking Alpha contributors have warned investors of the impending downturn.

The crypto market has suffered from high-profile bankruptcies, including the collapse of FTX, as well as broader risk sentiment spurred by rapidly rising interest rates and concerns over the future of the cryptocurrency. economy.

Bitcoin (BTC-USD), the mainstream totem of the crypto market, has fallen around 65% in 2022.

Many of the pro-crypto arguments that have fueled its rise in previous years have come under scrutiny, from Bitcoin’s potential as an inflation hedge to the idea that a market can operate efficiently. in the absence of substantial regulatory oversight.

Here are Seeking Alpha’s editors’ picks for some of the best work by contributors predicting the 2022 crypto meltdown.

Acknowledge that Crypto Winter was coming

Crypto entered 2022 with persistent enthusiasm. Bitcoin (BTC-USD) reached a high of nearly $69,000 in November 2021. It was well above that peak at the end of 2021, but was still hovering above $47,000 at the start of the year. But some experts saw troubled times ahead.

Alpha research contributor Clem Chambers anticipated in January that the crypto was on the verge of a crash – one of the sharp pullbacks that have marked crypto history. “If we see below $40,000, a move to $20,000 territory will follow quickly,” he predicted. (Even that would prove overly optimistic, as BTC-USD would fall below $15.5,000 at some point.)

Along with technical signs of trouble, Chambers based his prediction on an idea that “retail is getting bored of crypto” as 2022 dawns. He also accurately predicted that Bitcoin “is not a hedging against inflation in the current market”.

Another contributor, BiotechValley Insights, added to the bearish voices at the start of the year. The analyst said crypto investors will encounter a perfect storm of negative factors that will crush the sector’s inflated price throughout the year.

Another prescient call came from contributor SA BOOX Research, which in January saw choppy waters for the crypto market.

In making its case, BOOX pointed to the fact that market participants’ treatment of Bitcoin was similar to that shown for “high-growth tech stocks and more speculative areas of the market” — a pairing that would likely continue.

This came as “macroeconomic uncertainties, including rising interest rates and questions about the strength of the economy, added to poor sentiment towards crypto,” BOOX wrote.

Survive 2022…and look to 2023

Many aspects of this perfect storm predicted by BiotechValley Insights and others materialized later.

TerraUSD (UST-USD), the third-largest stablecoin by market capitalization, ranked among the victims. The crypto lost its peg to the US Dollar in May, pushing Bitcoin (BTC-USD) to as low as ~$30,000. Its sister coin Luna (LUNA-USD) also lost market confidence.

There was more damage to come. During the second half of the year, the market was plagued by a series of high-profile crypto-related companies that fell victim to liquidity issues, many of which filed for bankruptcy.

The most publicized of these was the collapse of Sam Bankman-Fried’s FTX (FTT-USD), once touted as a stabilizing force in the industry. The fallout has caused a domino effect in the sector, which has not yet completely subsided.

Before FTX’s implosion, Chambers said “the chance of seeing $15,000 this year is high.” Bitcoin (BTC-USD) fell to a low below $15.5,000 in November following the collapse of FTX, down around 77% from its high of around $69,000 in November 2021.

The bear market has also forced crypto miners to sell Bitcoin assets and reserves, with some even limiting operations or filing for bankruptcy.

SA contributor Made Easy-Finance warned of the impending doom of miners if Bitcoin (BTC-USD) fell to $10,000. “Bitcoin miners could risk insolvency…we found that the total total cost of a mining company is $25,000 to ~$40,000 per BTC,” he said.

But crypto bulls are still bullish. BOOX Research said the FTX saga could mark a needed reset for the crypto sector before a rebound, while Knox Ridley remains optimistic due to rising bitcoin adoption.

This short-term bearish and long-term bullish sentiment was common even among the group predicting a big decline in 2022. $000, it will still reach $100,000 in 2025/2026.”

On the other hand, many believe that crypto recovery may never materialize. “Fundamentally, I think the Bitcoin and crypto market should never have reached where it is today. Already there has been significant pain caused by its downturn. More likely than not, this pain will continue,” warned Daniel Jones.

Read why SA author Jeremy Blum thinks investing in gold is more beneficial than cryptos.

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