- December 28, 2022
See Ya Later, 2022!
That’s what many in the Bitcoin world are saying after this year seemingly broke the back of the flagship cryptocurrency. But, unfortunately, this year’s bitter crypto winter washed out many pundits and Bitcoin bulls who argued the coin would soar to new heights. To be fair to those like Tim Draper – who predicted in 2018 that Bitcoin would hit $250,000 per coin by the end of 2022 – this year caught many studying the markets by surprise. Few might have predicted the spectacular collapse of crypto heavyweights like Terra and FTX that shook the industry to its core. Sustained inflation and uncertainty within traditional financial markets certainly didn’t help, primarily due to factors like the ongoing Russia-Ukraine war and feverish activity by many central banks to ramp up interest rates.
Here’s a blow-by-blow review of 2022’s biggest Bitcoin-related headlines.
- While plenty sent the well-known crypto reeling, there are still a few silver linings as the year comes to a close. Now to be precise – Bitcoin started 2022 on a rocky footing.
- While the coin did start in January at about twice the value it enjoyed in January 2021, the rest of the month wasn’t as rosy. As a result, most of 2021’s gains were erased as the coin dipped into the $33,000 range by the end of January 2022.
- Economic uncertainty across the first few months of 2022 led to lingering questions. Many knew major projects would strain as investors pulled money from the market. No one might have expected that the then- $ 18 billion terraUSD stablecoin would lose its $1 peg on May 19th and fall to 35 cents by May 9th. The LUNA token also collapsed to just a few cents from $80 by May 12th.
- The hedge fund Three Arrows Capital went bankrupt due to its exposure to terraUSD. The fallout wiped billions off the crypto market and sent the average Bitcoin closing price to about $24,000 in June 2022.
- Over the summer, bankruptcies and issues with significant projects, like the Celsius Network, temporarily halting withdrawals in June, sent BTC’s price sliding downward.
- 2022 also revealed more details about Bitcoin’s correlation to major stock indexes like the Nasdaq 100, which is tech-heavy. Depressed stock prices due to high inflation, restrictive monetary policies, and sluggish growth have undoubtedly affected Bitcoin’s price.
Bitcoin 2022 Year In Review, Continued
- FTX was another major hammer blow to Bitcoin in 2022. BTC reached a then-two-year low of $15,480 in late November as crypto investors and supporters weathered the collapse of the FTX crypto exchange and the allegations of fund misuse by sister firm Alameda Research.
- Initial estimates project FTX might have at least 1 million creditors. Some reporting claims FTX could owe more than $3 billion to its top 50 unsecured creditors.
- In late December 2022, FTX founder Sam Bankman-Fried was released on $250 million bail after his extradition to the United States. However, reports say he will stay with his parents at least over the holidays after appearing in a New York City court on December 22nd.
Looking back across 2022, the crypto gloom looks sobering. For example, late December reporting from CoinDesk reveals its CoinDesk Bitcoin Price Index slid 65% across the year to about $16,500 as of December 20.
But there are a few silver linings amid the crypto carnage.
To start, in 2022, Bitcoin had another year of 100% uptime without protocol-level hacks, bugs, hard forks, or emergency restarts. The scaling Lightning Network also experienced a year of massive growth, with the number of channels growing by more than 80% in 2022. Other services and tools like Machankura and Taro also expanded Bitcoin’s scope and utility.
So what’s ahead for Bitcoin in 2023? Many argue the crypto winter could extend into the next year as consumer confidence remains rocky after Terra and FTX. Moreover, general economic outlooks do not look any more robust. Others claim the continued adoption of crypto could lead to massive regulatory battles, and concerns about platforms could lead to a disaggregation of significant exchanges and players to stop another FTX. Of course, Bitcoin’s scheduled 2024 halving could also affect price action as these events often trigger crypto bull runs. So let’s see what 2023 brings.