The crypto industry fell into a year-long hangover after a euphoric 2021. However, there could be positives.
December 30, 2022 11:39
Crypto’s 2022 was one of the most important and difficult years on record. After an extremely bullish 2021 that saw Coinbase go public in the largest direct listing ever, the first bitcoin exchange-traded fund and the inaugural cryptocurrency nearly hit $70,000 on two separate occasionsthe market experienced a dramatic reversal.
While high-profile crashes like the terraUSD stablecoin and its sister token luna, and of course Sam Bankman-Fried and the quick demise of FTX, will grab the headlines and get most of the blame, cryptocurrencies also faced massive macrowinds as the US Federal Reserve and its central bank counterparts around the world began to undo the massively accommodative monetary policies instituted at the start of the coronavirus pandemic.
Despite these struggles, the verdict for 2022 will remain unknown for several years. For example, optimists view the bankruptcy cases of FTX, the lender BlockFi, and the hedge fund Three Arrows Capital, among others, as a necessary selection of fraudulent or irresponsible companies. If regulators use these unfortunate cases as the final push needed to take meaningful action on cryptocurrencies, there could be a silver lining to all this pain.
But until then, here are six figures that defined cryptocurrency in 2022.
The total drop in the total market capitalization of cryptocurrencies in 2022. The figure was $2.3 trillion on January 1, 2022. Today it has dropped to $843 million.
This decline does not even capture the full extent of the climb, as the value peaked on November 8, 2021, when it surpassed US$ 3 trillion.
The last time the cryptocurrency market capitalization was this low was on January 2, 2021.which was the beginning of the cryptocurrency bull run fueled by the pandemic.
The percentage by which Coinbase’s stock value decreased in 2022. COIN started the year at $251.05, before falling to a record low of $34.23..
The underperformance can be attributed to many factors, in particular falling cryptocurrency prices, which have a negative impact on customer registrations and trading volume, the latter of which accounts for more than 80% of the total. Coinbase revenue. The stock suffered further after the fall of terraUSD/luna in May and the bankruptcy of FTX in November. Although Coinbase was largely immune to direct exposure from both entities, its status as a cryptocurrency benchmark influenced its price.
Coinbase was not alone among crypto proxy stocks in its struggles. MicroStrategy, the world’s largest corporate bitcoin holder, is down 70.61%, and Marathon Digital Holdings, one of the largest publicly traded crypto mining companies, is down 89%. Silvergate Capital, a California-based bank that almost exclusively caters to crypto firms, is also down 89%. Silvergate is being hit particularly hard by its partnership with FTX, whose fiat currency deposits at the bank accounted for about 10% of its $11.2 billion base.
However, it is worth noting that COIN and other cryptocurrency stocks were not the only ones that struggled during this difficult environment. Prominent tech stocks like Amazon, Netflix, Zoom, Meta and Tesla are down more than 50% this year. However, these shares rallied in November, while Coinbase continued its decline following the FTX bankruptcy.
This number represents the number of unique active wallets (UAWs) participating in blockchain-based gaming. The builders continue to build as they search for the killer apps that will push the industry past the speculative mania. One sector that saw notable growth this year was blockchain-based gaming. According to a report from DappRadar, gaming became the most popular sector this year according to a metric called UAW that tracks how many independent wallets interact with an app.. As the graph below shows, their number of users grew by 65% year over year. The two main titles were the battle games Splinterlands and Alien Woods.
By comparison, DeFi applications only grew 2%. In fact, the total amount of value locked (TVL) in DeFi applications dropped by $125.3 billion. TVL is not a perfect metric, because it is largely a reflection of the spot value of assets held in DeFi and decreasing values do not necessarily indicate an exit, but it is an important data point. Many entrepreneurs expect verticals like DeFi and blockchain gaming to cross-pollinate in the coming years and create symbiotic relationships.
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This is the amount that Sam Bankman-Fried, founder of cryptocurrency exchange FTX, claims to have left in his bank accounts of a fortune that reached $26.5 billion on DATETK, ranking him 32nd on the Forbes 400 list. . He is currently out of jail on $250 million bail., secured by his parents’ home in Palo Alto, CA, where he will remain in restraint until his trial. Bankman-Fried is currently fighting fraud and conspiracy charges, as well as separate civil charges from the SEC and the Commodity Futures Trading Commission. For Forbes’ full coverage of the FTX collapse, click here.
The amount of cryptocurrency stolen this year by hackers and scammers. While debate continues over the actual usefulness of cryptocurrencies to hackers (on the one hand, they are bearer assets, but on the other hand, everything on a blockchain is theoretically traceable even years after the fact), one cannot deny that bad actors see the asset class as a juicy target.
According to crypto forensic analysis firm Chainalysis, October (the last month the data was available) was the worst month on record for attacks ($718 million stolen).
A particular target for hackers this year was bridges, portals between blockchains that allow users to transfer assets from one platform to another. At least $2 billion of the total stolen comes from bridge hacks, the two biggest being a February $320 million attack on Wormhole, which connects Ethereum and Solana, and a March $600 million Ronin exploit. , a bridge used by players of the blockchain-based game Axie Infinity.
The number of congressional hearings held this year that focused primarily on cryptocurrency and blockchain policy. The most active committees were the Senate Banking and House Financial Services panels, which spent time on everything from trying to understand the implications of privately issued stablecoins for the US dollar-centric financial system to trying to find out how Congress can guarantee that major coup. Oops like FTX never happen again. There is optimism in some crypto circles that the magnitude of the FTX collapse will inject a sense of urgency to lawmakers to make significant progress next year..
Part of the challenge for lawmakers includes resolving turf wars between competing agencies seeking primacy in the crypto market. The SEC, led by Chairman Gary Gensler, has adopted a regulation-by-industry-enforcement approach, based on specific actions such as filing insider trading charges against a former Coinbase employee and his associates, as well as celebrity Kim Kardashian for promoting a token, called ethereum max without telling his followers he was paid US$ 250,000 to do it. On the other hand, the CFTC is looking for the upper hand. New legislation may be needed to settle this debate, and the dividing line may come down to whether or not crypto assets can be determined to be securities.
*Note published in Forbes USA.