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2022 Crypto Recap: A Wild Year!

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2022-12-30
2022 Crypto Recap: A Wild Year!

What a year it has been! Let's look back and summarise some of the most impactful events that happened in 2022.

December marks the end of a yearly cycle, just as this year marked the beginning of a downtrending cycle, also known as a "Crypto Winter." Some would say that 2022 has been the worst year since the inception of Bitcoin, but really, it is just another piece of a much grander cyclical pattern that forms the overall narrative of the cryptocurrency industry. Let us take a look at the events that helped shape this year's narrative and recap Bitcoin's performance.

Volatility

As Bitcoin reached its peak in November 2021, trading at $60.000, we have seen a steep decline in prices ever since, as we dropped heavily into the end of the year with a whopping 52% decrease in price in just over a month. January started off fairly stable and formed a bearish pennant over the next three months in a relatively slow-moving market. 

In Q2, a big crypto scandal arose when LUNA collapsed alongside the macro outlook, painting a grim picture for the near future as it started quantitative tightening. With the global financial situation not looking good, its internal scandal with LUNA pushed the price down another 63%, bringing the bearish pennant that formed during the first quarter of the year to an end.

Since then, Bitcoin has been relatively quiet and range-bound during its third quarter, until yet another major incident occurred. When it became clear that after taking significant heat on Twitter, the FTX exchange evaporated under its immense social pressure, giving the final blow to the crypto industry for the year and resulting in yet another 26% decrease in price.

Once again, Bitcoin is now trading in a sideways market. The outlook, on the other hand, is bleak, as prices have yet to reclaim some key resistance levels, and the FED has announced that it will continue to raise interest rates well into next year. Overall, the market remains volatile, with the likelihood of remaining range-bound rather than reversing into a new trend as we enter a new quarter of the new year.

The Fall of Terra LUNA

The stablecoin scene has seen the first major network collapse of the year. Terra was, at the time, among the largest, with an ecosystem worth over $40 billion. After whales found and used a weak link in the ecosystem, a full-blown bank run ensued as the UST stablecoin lost its peg. The result was a total collapse of the protocol, which caused a market wipeout. Even with billions evaporated into thin air, the damage was not brought to a halt. The wipeout resulted in an immediate liquidity crisis, hitting major players in the market like Celsius, Genesis, and Alameda, setting up the foundation for one of the greatest scandals in crypto to date.

The Demise of FTX Exchange

Hit hard by Terra's implosion, over 15 prominent companies and crypto projects were forced to fold, and it seemed that the worst part of a series of crypto disasters was over. Until a seemingly personal feud erupted on Twitter between CZ (CEO of Binance) and SBF (CEO of FTX exchange). This series of tweets sparked many questions about Alameda Research's (a sister company of FTX's) liquidity among investors, and another bank run followed. As FTX was considered one of the largest exchanges in operation, the bank run on the FTX platform was only the tip of the iceberg. It turned out that most of the assets on the exchange were already gone. It came to light that FTX actually used customer funds to trade with and lost those funds, leaving a massive hole in the books of FTX. A total collapse of the platform followed, and with another behemoth of a scandal now coming to fruition, billions of dollars are lost. The demise of FTX is still very recent at the time of this writing, and investigations are still ongoing. Therefore, it might be possible that new details will come to light as time goes on.

EU Regulations on Digital Assets

Over the summer, European lawmakers came to an agreement on regulating cryptocurrencies, known as MiCA (Markets in Crypto-Assets). This is the first attempt by the European Union to create a framework for regulating digital assets in the region. Opinions are divided, with an equal number of people opposing regulation. However, due to the major events that have happened within the last year, there has been a strong increase in those who are in favor of more regulation in the crypto markets.

Ethereum Merges

One of the most anticipated events this year has been the Merge of Ethereum. In September, Ethereum made the transition from a blockchain that runs on Proof-of-Work (PoW) to Proof-of-Stake (PoS). On September 15th, 2022, the merge was successfully completed, reducing the energy consumption of Ethereum by more than 99%.

Read more about the merge here!

The Crypto Burrito (Volume I): Ethereum Merge

The Crypto Burrito (Volume II): Terra’s Fall From Grace

The Crypto Burrito (Volume III): The Never-Ending Saga of FTX

The Crypto Burrito (Volume IV): Understanding 2022’s Crypto Bankruptcy Filings

 

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