Chronicle of a bitter-tasting year 2022 for bitcoin (BTC)
It’s time for the end of the year review and the currency created by Satoshi Nakamoto is no exception. If there’s one thing to hold back for bitcoin (BTC) this year, it’s been anything but a calm river. The days of the queen of cryptocurrencies have not been easy. Through the roller coaster, she steered her boat through the bear market. Thus, it was in a gloomy context where some skeptics had already programmed her killing that she demonstrated resilience. Fortunately, the queen of cryptos has not said her last word. Let’s dive into the retrospective of an unforgettable year.
The current analysis was prepared in collaboration with the Bitget crypto exchange platform. Present in over 100 countries, Bitget is a cryptocurrency exchange established in 2018. With a user base of over 8 million, the digital asset platform offers a variety of services to its clientele. These include derivatives trading, spot trading, social trading and copy trading. Thanks to its innovative products, Bitget appeals to both amateurs and professionals.
To the genesis of the bitcoin (BTC) meltdown
It is to be said that 2022 was a chaotic year for the global market, both for the traditional financial system and for that of digital assets. With the covid-19 pandemic, businesses have found themselves boosted by supportive government policies. To this end, they have benefited from numerous advantages in terms of taxation and rates which have boosted their performance.
However, all good things come to an end, as the popular saying goes. This honeymoon could not last ad vitam æternam. Thus, regulators began to save the oxygen granted to companies. Also, their business performance therefore began to falter.
To be more specific, when interest rates are higher, the cost of borrowing appreciates at the expense of investments. Because of this, it results in lower demand and liquidity in the economy. It didn’t take long for the Nasdaq to fade. The bitcoin (BTC) which is strongly correlated to it also pays the price as we can see:
A promising start to the year
Nothing foreshadowed the storms to come. The year 2021, with the pandemic, had inflated the price of BTC to block, reaching 68,000 at the end of November. Its market capitalization was also breathing form as it was $876 million.
Since then, the price has lost 65% of its value in just under a year and its market capitalization has plummeted to 324 million. The graph shows the evolution of the bitcoin price since the 1uh January 2022.
The flops are linked for bitcoin (BTC)
Admittedly, investors were increasingly worried about the uncertainty surrounding the global economy with the war between Ukraine and Russia unleashed in February. The specter of regression hung around the world, making investors increasingly risk averse.
Central bank announcements of interest rate hikes to stem inflation are also driving bitcoin (BTC) reuse. Nevertheless, the currency created by Satoshi Nakamoto had managed to hold above 35,000 despite the hyper inherent in cryptos.
However, these conditions were nothing like what the market experienced from May onwards. In this case, circumstances such as earthquakes have plunged the market into a real cataclysm. These impromptu events are actually bombshells that exposed one after another, making 2022 a true noir series.
Terra Luna opens the ball
The Collapse of Terra (Luna)specialist of algorithmic stablecoin was the first trigger. The massive sale of UST which together with Luna was the cornerstone of the blockchain improved Terra’s loss. The mechanism involves the anchoring of the UST by an algorithm to the dollar and Luna whose role is to preserve the anchoring of the UST.
According to Chainalysisthe liquidation of these USTs is said to have its origins in two traders who took advantage of a move by TerraForm Labs in the liquidity pool to successively exchange quantities of UST for USDC.
3AC bring Celsius and Voyager Capital to the dance in July
Three Arrow Capital (3AC), a crypto hedge fund, was a big hitter with its 10 billion in assets it managed. This was before defaulting on several loans contracted with institutions including Celsius Network and Voyager Digital.
The hedge fund happens to be one of Terra’s collateral damage. Indeed, before the fall of Luna, he had changed with BTC against LUNC for around $500 million of LUNC with the Luuna Foundation Guard (LFG).
Since then, 3AC in liquidation has also drawn Celsius Network into its wake, which has gone into bankruptcy Voyager Digital whose assets Binance acquired.
FTX throws an uppercut in November
The second largest exchange in the world turned out to be a giant with feet of clay. It was the revelations of FTX’s insolvency risk by Coindesk that set the powder keg on fire. Concretely, Alameda Research, sister company of FTX, mainly owned FTT tokens, native to the FTX exchange.
The following is worthy of a soap opera. Binance, which had agreed to rescue FTX, withdrew its support. At the same time, sums have evaporated from the exchange. Finally, Sam Bankman-Fried aka SBF is charged eight counts, including fraud, conspiracy and money laundering.
The extent of FTX contagion is not yet known. For example, Crypto lender BlockFi filed for bankruptcy at the end of November, filing its customers in disarray. It is to be wondered how many others will follow.
Binance adds fuel to the fire in December
These chain flop have been accompanied by massive withdrawals from exchanges in recent months. The most notable are those that took place on Binance. About 3 billion dollars have made their way to the platform.
All this is a sign of a gradually eroded confidence of investors who are pushed by the economic situation to find places that they consider safer for their assets.
Beyond the fiasco
Market setbacks have tended to overshadow the good progress in the adoption of bitcoin (BTC) in 2022. For example, the Central African Republic has adopted bitcoin. In this context, it joins El Salvador, which had already taken the plunge in September 2021.
In addition, the world leader in payment Paypal now authorizes transfers of BTC, ETH and LTC to external wallets. Likewise, the Swiss locality of Lugano experimented with the acceptance of BTC and USDT at the king of fast food McDonalds.
2022 is a real odyssey that remains in the annals of the history of cryptocurrencies. Cascading bankruptcies, macroeconomic pressure… The bitcoin card game is not the most advantageous. Indeed, it evolves in 2022 in a declining environment against the backdrop of a war between Russia and Ukraine whose economics are real shocks. This year ends on sour flavors. Despite this, bitcoin (BTC) is still the number one cryptocurrency in the world. Besides, just observe its growing adoption around the world.
Receive a digest of news in the world of cryptocurrencies by subscribing to our new service ofDaily and weekly so you don’t miss any of the essential Cointribune!
As a finance professional, I consider blockchain to be a real revolution thanks to all its innovations that have a global impact. It is with passion that I take part in this new digital era through my articles.
#Chronicle #bittertasting #year #bitcoin #BTC #Cryptomonnaie