The crypto highlights of 2022
The past year, 2022, has been eventful in the crypto world. While 2021 could have been considered one of the best years of cryptocurrency, with many people making it big through crypto, 2022 has taken a significant turn as trillions of dollars have been lost.
The early drop in the crypto marketplace in 2022
The price instability for equities and cryptocurrencies increased further in early 2022. Despite the claims of many cryptocurrency fans, virtual currencies did not act as a protection against inflation. Stocks started to change as it became evident that the Fed would have to raise interest rates to control inflation. Several thought the crypto winter had started as traders hurried to withdraw their money. It became clear that cryptocurrency would be different from the inflation safeguard that many had anticipated it would be. The cryptocurrency was simply another asset whose value changed according to economic determinants.
The Luna collapse
The Luna network breakdown in May was considered the greatest Blockchain disaster, with an estimated $60 billion loss. The value of stablecoins had changed. Due to the several victims and enormous financial losses suffered by individual traders, this rocked the whole worldwide marketplace for virtual currencies.
The original luna coin was the prominent participant in the crash. There was a shortage of funding throughout the whole crypto market with the drop of luna. Before being taken down, the Luna coin’s value decreased from an all-time high of around $119 to less than a tenth of a penny.
The two prominent Bankruptcies of the Year
Some cryptocurrency firms have encountered economic issues lately, even though the technology underpins it is ground-breaking. Here are two examples of how a company’s prospects might shift after appearing to thrive just in a few months:
- Celsius Network
In 2017 when Celsius Network launched, it was highly represented as a bank. Based on the firm’s website, customers could invest in cryptocurrency and receive income of up to 17%, and Celsius would offer mortgages based on those investments. (Last year, authorities in several regions asked whether Celsius assets were legal.) The firm prohibited its 1.7 million customers, who had access to a maximum of $20 billion in assets, from withdrawing in June 2022. The company filed for insolvency in July. In a legal brief, the company said that between March 30 and July 14, 2022, the worth of its holdings had decreased by 80%.
- FTX Collapse
When the FTX platform crashed, It was one of the worst scenarios in the crypto world. It also caused the fall of more cryptocurrency creditors. Although this current crisis has previously been addressed in other pieces, it bears mentioning that the FTX exchange moved from being too big to collapse to entirely breaking apart in a relatively short period of time.
The cryptocurrency exchange FTX was bankrupt for more than ten days in November 2022. A study revealed the extent of the solvency and liquidity difficulties. By enlisting the aid of its rival, Binance, FTX attempted to save itself from the impending collapse. However, the discussions ended quickly. In a matter of days, FTX had its finances frozen, its CEO resigned, and it filed for bankruptcy.
The investment company, Alameda Research, has been investigating whether FTX was issuing its clients’ money to trade from this company.Bankman-Fried has attributed the bankruptcy of the former $32 billion valued company to inadequate management and administration, but needs to elaborate and provide further explanation.
Ethereum Merge was the 2nd stage of the Ethereum 2.0 (ETH2) update, which aims to change the platform’s substructure and switch from the Proof-of-Work (PoW) consensus system to the Proof-of-Stake (PoS) consensus system to boost the Ethereum network’s capacity for growth and safety.
Since Ethereum’s fundamental issue was its speed, using Proof of Work as its method became insufficient as Ethereum grew. The Merge will boost transaction speed at Ethereum’s ecosystem in massive size. The process of transformation from proof of stake to proof of work used the Beacon chain.
With the switch from PoW to PoS the Ethereum network will not only be more scalable, but also more eco-friendly.
Crypto market cap meets over $3 trillion.
During 2022 for the first time ever, the value of the global crypto space passed $3 trillion. According to CoinGecko, which follows the rates of more than 10,000 digital coins, the total value hit $3.007 trillion (2.6 trillion euros). As crypto becomes more accessible in the worth, the most prominent cryptocurrency in the market, Bitcoin, reached a value of $66,000 in November.
The trading worth of Ethereum, the second-largest Blockchain coin, reached a new milestone of $4,768, which is more than the all-time price of Ether.
A significant turning point in financial history was the innovation of Defi. Defi, which started to really take-off in 2020. The growth of tokens like Compound and Sushiwrap provided profitable returns to cryptocurrency traders. More than $78 billion has been invested in Defi, which has seen ten times growth since May 2022.
NFTs on the apex and fall
NFTs reached their highest level of $17 billion (in amount transacted) in January, driven by Bored Ape Yacht Club and OpenSea’s excessive value.The marketplace has lost nearly 95% of its value since January and is now close to $44 million.
360,000 current OpenSea members hold NFTs. However, only 9% have goods worth 80% of the total NFTs.
NFT trade traffic hit a milestone high of $17 billion in January but dropped to $466 million by September.Similar decreases have also been observed in other parts of the NFT sector. The number of deals on Open Sea, the biggest NFT market, dropped by 99 per cent in August, from 2.7 billion in May to 9.34 million. Additionally, from their peak in May and July, the values of well-known NFTs from Bored Ape Yacht Club and CryptoPunks have decreased by 53 per cent and 20 per cent,respectively.
Biden announces a need for specific rules due to cryptocurrency.
Lack of clarity and regulation around cryptocurrencies have been instrumental in the market not being widely adopted. With the leadership ofEither consumers or companies would be cautious about pursuing cryptocurrency’s possibilities if authorities and legislators took the step to comprehend it and put it under the rules. With the leadership of President Joe Biden, the US government made a decisive move in March 2022 to legalise cryptocurrencies and increase market transparency.
The order instructed government organisations to provide detailed strategies for regulating and implementing cryptocurrency in the United States. However, previous rules were appreciated, even though unfriendly policies have a record of causing significant crypto collapses, such as China’s crypto campaign. The executive action gives optimism for the growth of cryptocurrencies even if authorities are not in a rush.
Ronin hack and $550M
Fraud and blackmail are frequent in the cryptocurrency sector. Numerous abuses affected the industry’s credibility each year. The nine-figure Ronin Network assault was one of the fascinating hacks of 2022. The incident damaged the reputation of Axie Infinity, one of the best Blockchain best Blockchain games yet, causing people to abandon it in search of more secure options. After, people abandoned the game in dissatisfaction in search of more vital options, causing AXS and SLP to decline.
It is claimed that that the Lazarus Group, a team supported by the North Korean government, was responsible for the hacking of five out of the nine Ronin network verifiers. They were able to scam almost $551.8M when the fragile verification system collapsed.
It’s significant to note that it took about a week before the attack was detected.. It got worse because it took the group about a week to learn about the circumstance. Following the event, the Lazarus Group launched more hacking assaults. Layer 1 network Harmony lost $100 million, and Arthur Cheong, the owner of DeFiance Capital, lost valuable Azuki NFTs.
Terra Collapsed after the USD
The Terra crash was one of the worst events that impacted the crypto sector in 2022. Because of its mechanism, stablecoin UST, Terra, a high-capacity crypto network, was renowned. LUNA tokens supported it. UST was only partially secured by fiat money or other cryptocurrencies, in contrast to most stablecoins. However, it tied the coin cost to the USD through a mathematical approach.
UST was one of the most popular cryptocurrencies as stable coins became a safety point for traders during the extended crypto winter that began in 2021. Anchor Network was another element that drove up the cost of LUNA and the UST total value. The consumers that invested in UST received up to 20% income from the Terra blockchain-based system. The amount of LUNA that entered the destroyed wallet grew together with the flow of UST dollars into Anchor. Traders then questioned whether the value of LUNA was too good to be accurate as it continued to rise. Blue-chip cryptos like Bitcoin and Ethereum and most cryptocurrency marketplaces crashed along with Terra, at a loss of billions of dollars. For a month, the marketplace didn’t exhibit any indications of improvement.
U.S. Treasury restricts tornado funds.
The Department of Global Affairs Prevention of the United States Treasury added the confidentiality system to its restrictions database after discovering that Tornado Cash is misused as a mechanism for financial fraud. Following concerns, it recommended that Tornado cash-using wallets be blocklisted for either centralised or DeFi systems. Alexey Pertsev, the inventor of the Tornado Cash base, was ultimately imprisoned by the Netherlands’ Financial Intelligence and Research Office.
The event had a destructive impact on the crypto background because it labelled the first time an open-source program rather than a platform had received official approval. The incident has sparked doubts about the resistance of the Blockchain sector to regulation. Does that imply that the administration also has the authority to stop decentralised developments? We must wait and see.
Twitter Purchase Fuels a Bull Run in Meme Currencies
Elon Musk is a well-known name in the cryptocurrency sector. Not as much for his industry-related efforts as for his controversial tweets. Additionally, he is passionate about Dogecoin, recently arguing that it is a more incredible coin than Bitcoin. The billionaire is responsible for a significant portion of the meme coin’s appeal. Although Dogecoin, like the rest of the sector, fell victim to this year’s round of cryptocurrency crashes, Musk’s purchase of Twitter helped it regain popularity.
Some claim it will include Dogecoin in the Twitter billing process, setting off a bull run and benefiting other well-known meme currencies like Floki Inu and Tamadoge.
Russia and Ukraine war and the effect on the crypto world
The conflict between Russia and Ukraine has highlighted the importance of cryptocurrencies and Blockchain and the innovation that powers them, particularly to disadvantaged populations worldwide. In many instances, we’ve observed the Ukrainian authorities request cryptocurrency funds. Ukrainians use cryptocurrencies as their primary form of payment after the Russian assault disrupted their way of life.
These incidents are a reminder of the potential of Blockchain, the ability to elevate the general public through a decentralised network that anybody can use without the necessity for administrators.
For all financial requirements, from transactions to pensions, relocated Ukrainians resorted to cryptocurrency since they had no access to regular banking and financial institutions. In reality, Blockchain really demonstrated its value by democratising community.
- democratising community by levelling the power balance for underprivileged populations locally and worldwide by making banking facilities available to anybody from anywhere.
2022 was a challenging time frame for digital currencies world, although most traders consider it a pivotal moment for the industry. Both private investors and institutional traders have learned a lot from 2022, particularly regarding authorising their funds to keep them safe. In addition, they have understood that due to investing in any coin, they must go through deep research and gain information about their purchase.
Governments also found the need for more regulation due to creating more transparency and more support for the investors.
Many things have yet to get news coverage. There is plenty to expect in 2023 and the future as Blockchain technology and Web3 apps expand through various sectors.