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CoinDesk Research 2022 Annual Crypto Review: The Crypto Credit Crunch – ValueWalk

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Today, CoinDesk Search published the Crypto Annual Review 2022, an in-depth analysis of key market trends that have impacted the crypto industry over the past year.

The biggest story in 2022 has undoubtedly been the crypto credit crisis and its related fallout, which began with a glut of crypto lenders promising a return to customers in exchange for deposits and culminated in the arrests in the Bahamas and the extradition to the United States from FTX and Alameda Research. founder Sam Bankman Fried (SBF).

It took years to prepare, and it’s not the first credit crisis in financial history, but this one is definitely crypto’s.

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The Crypto Credit Crunch – Executive Summary

In the following report, we aim to summarize some of the key themes and metrics that mark this year’s progress in cryptocurrency.

As with all financial assets, market performance is usually the first thing that comes to mind when considering a ‘year in review’. Bitcoin (BTC) and Ether (ETH) followed a blistering 2021 with a decline of 65% and 67% in 2022.

As for macro-assets, their correlation behavior with bitcoin remains an unfinished story. Only bonds ended the year in a band uncorrelated to bitcoin, while equity indices maintained a somewhat positive correlation and the US dollar index maintained a somewhat negative correlation.

BTC

These difficulties in market performance seeped into Bitcoin mining companies, like a perfect storm of headwinds led most publicly traded bitcoin mining companies to shed an immense amount of value.

Of the five largest public bitcoin miners measured by bitcoin hashrate, the top performer was CleanSpark which still lost 79%. Bitcoin’s hashrate rose steadily as mining machines bought in the throes of the bull market came online and, combined with bitcoin’s poor price performance, leads to general difficulties in the mining industry.

That said, the amount of venture capital funds raised by blockchain and crypto companies has increased in 2022, reaching almost $30 billion. Although growth was much slower than it was in 2021, there was still a lot of venture capital going in as the venture capital funds that raised in 2021 needed to deploy that. dry powder in 2022.

ETH

In this bear market year, we can find comfort in technology that has continued to develop. The talk of the town for Ethereum was the successful merger implementation that moved the second-largest cryptocurrency from a proof-of-work consensus mechanism to a proof-of-stake consensus mechanism.

Meanwhile, Bitcoin has been ticking, with more nodes applying the 2021 Taproot upgrade while adding exciting potential use cases to the Lightning Network – its commerce layer – through the growth of the network and the announcement of Taro by Lightning Labs.

Meanwhile, it’s been a strange year in the world of politics. While massive legislative efforts like the European Union’s proposed Crypto Asset Markets Act (MiCA) have come close to becoming law, few countries have actually implemented new laws providing great clarity for the treatment of digital assets. However, the massive outages in 2022 are likely to create new pressure for regulators to actually do something for the sector.

ETH BTC chart

From a regulatory perspective, we have seen a majority of Ethereum transactions are compliant with the Office of Foreign Assets Control (OFAC) as the US Treasury Department blacklisted the Tornado Cash mixing program in August, leading to the arrest of one of its developers, Alexey Pertsev .

And of course, any discussion of crypto in 2022 would be incomplete without discussing our first good crypto credit crisiswhich began with a glut of crypto lenders promising a return to customers in exchange for deposits and culminated in the arrest in the Bahamas and extradition to the United States of FTX and Alameda Research founder Sam Bankman-Fried (SBF).

It’s taken years and it’s not the first credit crisis in financial history, but this one is definitely crypto’s.

Read it full report here by CoinDesk.

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