Cryptoverse: Farewell to the year when bitcoin crashed
https://coinunited.io/learn/cryptoverse-farewell-to-the-year-when-bitcoin-crashed
The year finishes with it slouched in an alley, having been cheated out of its brew of cheap money and leveraged bets and despised by the mainstream. As interest rates rose, people became less willing to take risks, and companies like Sam Bankman-FTX Fried's went bankrupt, the whole cryptocurrency market shrank by $1.4 trillion, causing the leading cryptocurrency to lose 60 percent of its value. Data from digital asset management CoinShares shows that net inflows into crypto funds have dropped to $498 million in 2022 from $9.1 billion in 2021, a trend that reflects the fact that traditional financial institutions have avoided the market during its annus horribilis. According to UBS's director of FX strategy, James Malcolm, 70% of his time in the first half of the year was spent discussing crypto with customers. As a counterpoint, "I spent less than 2% of my time talking crypto" over my 10 days in North America last month, which stretched from Montreal to Miami. Until the price drop in November of last year, conventional institutional investors didn't consider cryptocurrencies as a viable investment option, Malcolm noted. Now it's totally in the far future. But it hasn't all been awful for crypto: in September of 2022, the Ethereum blockchain completed its "Merge" mega-upgrade, switching to the less energy-intensive "proof of stake" mechanism. Anthony Georgiades, co-founder of the Pastel Network blockchain, described the event as "a technological marvel" and "one of the lone positive occurrences in a year that otherwise has been very bleak for crypto." It's difficult to be pessimistic about crypto in 2023 in light of all this growth." Chief investment officer of IDX Digital Assets Ben McMillan cited the growing acceptance of blockchain-based products like as decentralized exchanges and decentralized finance as a significant trend in 2018. As a result, "it is highly bullish for the ecosystem and something to keep an eye on long-term," he said. Fiscal and monetary assistance from nations throughout the world to fend off the economic devastation from COVID lockdowns pushed Bitcoin to a record high of $69,000 in November 2021, with the crypto market exceeding $3 trillion. But when society began to function again, investors fled higher-risk assets like tech stocks and cryptocurrencies as central banks raised interest rates to combat rising inflation. Bitcoin, which had been touted as a useful store of value in times of inflation due to its restricted supply, failed the test, with investors instead opting for tried-and-true havens like the dollar when rates rose. The decline in January was almost 33%, which was much steeper than the 8% drop in U.S. stocks. They have never lived through a downturn or saw asset rates increase, "Director of Research at Arca Digital Assets Katie Talati remarked. The big projects were under money as investors abandoned crypto. Both the "stablecoin" terraUSD and its sister coin, luna, were the first to be compromised. The value of Bitcoin and other tokens crashed by more than half in the 49 days following the end of May. Bitcoin dropped more over 15% in a single day in June, its largest one-day percentage drop since March 2020's COVID turmoil roiled global markets.
In the realm of crypto, 2022 has been a disaster. This was "the year when the leverage-inflated bubble broke, showing the fundamental flaws of a sector that had grown too big, too quickly," as economist Noelle Acheson described it.
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