So how did the last year go for ya? Well, 2022 was a difficult time for many crypto investors. This market is known for its volatility but with the increase of new investors, cashing in on the pandemic-induced bull run, expectations for greater gains were high. Unfortunately, when reality struck and the world crypto news outlets started to report losses of huge proportions, those same investors who had invested in the hope of a quick buck were left feeling let down and disappointed.
The markets went from FOMO to FUD in what seemed like a blink of an eye.
From euphoria to war-driven use cases, to upgrades and collapses, the crypto market in 2022 was no less than a rollercoaster of events. The crypto industry saw it all during the year, and it’s only appropriate that we review the year’s biggest events to gain some insights into what this market could look like going forward. Let’s review the ride that was crypto in 2022.
2022 Has Been A Difficult Year For Global Markets
Although crypto struggled for the greater part of 2022, the global markets were not immune to the effects of the broader global economy. As economies around the world took a nosedive, investors that had put their money into stocks, bonds, and commodities were also left feeling the pinch. This is because as recession looms, interests in alternative investments, such as crypto, decline. With uncertainty comes risk-off investing rather than risk-on, meaning crypto investors have a harder time finding support for their investments.
The aftermath of the pandemic also impacted global markets in global supply chains. This led to lower outputs from factories, a decrease in demand for products and services, and an overall drop in the health of global markets. Federal banks all across the world also printed money heavily, enabling capital to flood into investments but as interest rates rise and access to credit becomes more difficult, the outlook for global markets heading into 2023 is uncertain. Despite this macroeconomic uncertainty, crypto investors had some good news to take away from the year.
A Strong Start To The Year
On New Year’s Day 2022, Bitcoin and Ethereum (ETH-USD) stepped into 2022 trading at $47,000 and $3,800 respectively. “WAGMI” and “To The Moon” echoed throughout the civilized space of Twitter and other online forums. Optimism was high, and the year seemed to be off to a good start with Bitcoin and other cryptos being the talk of the town.
However, the price of cryptos continued to decline from there. Most charts looked like an avalanche as we entered into crypto winter. Many investors were touting “HODL” while secretly wondering if they would actually ever make it out of this bear market. Most people were ready to brace for financial impact but in February, there would be another threat. This time much more… Warlike.
Crypto and the Russia-Ukraine War
On the grim morning of February 24th, Russian president Vladimir Putin decided to invade Ukraine. Fears of world war three lingered for several weeks but throughout this difficult time, a few interesting use cases for crypto emerged from this event. This is because financial asset funds fury fueled war efforts, and Ukraine needed to find alternative sources of funding. As you can imagine, traditional investments were out of the question as Russia had threatened serious repercussions for any party that funded the Ukrainian military.
Cryptocurrency, however, provided a safe haven as it could be used as a way to collect and move funds without the risk of political backlash. In fact, Ukraine’s government raised more than $63.8 million, from various donors. Rather than having monetary value stolen by third-party middlemen, crypto enabled a direct transfer of funds to the Ukrainian government and military. Come Back Alive is the NGO that helped organize this charitable effort with notable freedom fighters such as Julian Assange and Pak selling some of their NFTs worth a total of $1.86 million.
Patreon suspended this NGO after military involvement but supporters of Ukraine from all around the world found a way around this censorship with crypto. As the world became more comfortable with cryptocurrency, its role as an alternative form of currency and method for transferring value became more widely accepted, providing a stream of resources during restrictive times. The Ukraine government also began selling NFTs of prominent Ukrainian art to preserve the work and raise money to defend against the invading country.
Ethereum’s Successful Merge
Merging from proof of work to proof of stake is no easy task. In fact, Ethereum developers have been debating the transition for years and many were worried that it would never actually happen as developers were split on how to ensure security and scalability. But on September 15th Ethereum developers pushed ahead and completed the merge to proof of stake. Success!
The result was a streamlined blockchain that allowed for faster transactions, lower energy consumption, and more secure infrastructure. This move was praised by many in the crypto community as it meant that Ethereum would become even more competitive with other blockchains, paving the way for a more decentralized and secure Internet of Value.
Despite the bear market, Ethereum developers proved that progress could still be made. Although crypto news review channels covered this story, many casual investors looked past it as the crypto market was still in flux. Techie talks aren’t as exciting as price moonshots, apparently. But, that doesn’t mean this progress needs to be overlooked. This merge is just the start of many more upgrades coming to the Ethereum blockchain in the years to come!
Crypto Exchange FTX Collapsed
The latest crypto news (for better or worse) featured one of the biggest financial scams in history! FTX crypto made headlines even to those that weren’t initiated into the crypto space. To briefly explain, the FTX exchange was ‘Wash Trading’ crypto, a practice meant to artificially inflate the crypto market. This malpractice was accompanied by their partnered company Alamada Research. Together the two corporations (both under Sam Bankman Fried) managed to swindle investors out of millions of dollars.
The FTX crypto scandal showed the world that cryptocurrency, just like any other financial asset, is not immune to corruption and fraud. Many investors lost their money as these companies found ways to manipulate the market. This could lead to further regulations from governments, making it more difficult to buy and sell crypto. Canada recently slammed down leverage-based crypto accounts (as a way to prevent wash trading schemes?) and more countries are likely to follow in the coming year.
This whole saga could be made into a movie. There are many moving parts, participants, and malpractice that would require an article on its own to unpack. But what can we learn from this? Well, for one… NOT YOUR KEYS NOT YOUR COINS! Unless you are the one controlling your funds then you cannot expect the exchange to do it for you. Exchanges don’t always have investors’ best interests in mind, so be sure to keep your funds in a secure wallet.
Why Did Crypto Crash In 2022?
Crypto is a complex system participating in an even broader complex system. It’s impossible to pinpoint the exact reason why crypto prices dropped in 2022. Some say it was the broader economic environment. Others will blame FTX. However, a series of bankruptcies and crypto mishaps shaped the collapse before SBF was found to be a fraud.
Crypto news 2022 was filled with gloom and doom. Investors expected to go to the moon, instead, they got Luna. They were hoping the markets were about to heat up with some profits, but Celcius contributed to the crypto winter instead. Although there was some good news in 2022, it was suppressed by the onslaught of troubles that came with this new asset class.
Demand for crypto assets was also largely driven by gamefi and metaverse dApps. Neither of these value propositions has been realized and as money tightens, selling out of certain assets is a must. As a result, crypto collapsed. A combination of corruption, leverage, speculation and economic troubles led to the downfall of 2022, but crypto is not dead. Not yet at least..?