Cryptocurrency: The Year 2022 In Review

2022 was a pretty tough year for cryptocurrency investors and businesses in the space such as exchanges and lenders. Although 2021 was a better year for cryptocurrencies, it was the onset of the decline in the value and relevance of cryptocurrencies that made its stretch into 2022. Different events such as market fluctuations, regulators, etc., went a long way into shaping the year for cryptocurrencies.

Cryptocurrency “GOAT” Bitcoin started the year trading at $47,686.81 and with a market cap of $902, 104,193,384.61. As of the time of writing this article, Bitcoin was trading at $16,845.20. Bitcoin’s wingman, Ether, started the year trading at $3,769.70 with a market cap of $448,537,615,143.00. As of the time of writing this article, Ether was trading at $1,218.18. 

The year has been a tough one for the crypto space with several investors losing confidence and businesses taking huge blows that led to the closure of some of them including big-name FTX. 

Let’s take a look at some of the events that shaped the year for cryptocurrencies.

The IMF Demanded That El Salvador Removed Bitcoin As A Legal Tender

In January, the International Monetary Fund (IMF) said that El Salvador’s adoption of Bitcoin, which it sees as a volatile currency, was going over the edge and a decision that a country should not even think of embarking on. This followed several criticisms that the country faced following its adoption of Bitcoin as a legal tender. In a statement, Directors at the IMF emphasized the risks associated with Bitcoin stressing “that there are large risks associated with the use of Bitcoin on financial stability, financial integrity, and consumer protection, as well as the associated fiscal contingent liabilities”. Bitcoin is, however, still a legal tender in the Central American country irrespective of the fluctuations the cryptocurrency has faced this year.

Ukraine Raised Over Millions In Crypto Donations Following Its Invasion From Russia

Shortly after Ukraine passed a bill to legalize cryptocurrencies, the country raised million in cryptocurrencies after Russia invaded it. As of March (the second week of the invasion), the country had received over $50 million in crypto donations. Ukraine’s government and Come Back Alive – an NGO supporting the military, both raised $54.7 million. A single donation of $5.8 million was received from Gavin Wood – founder of cryptocurrency Polkadot. 

US President Joe Biden Signed Executive Order On Cryptocurrencies

In March, US President Joe Biden signed an executive order concerning cryptocurrencies. This order came amid a time of increased global regulatory concerns around cryptocurrencies. The focus was on the protection of consumers, investors, and businesses; protecting the US and its ability to compete on a global scale; mitigating illicit activities; promoting financial inclusion, safe access to financial services, supporting advancement in technology, and ensuring responsible development and use of digital assets; and exploring a central bank digital currency. The executive order was also a call on the US Treasury to assess and develop recommendations on cryptocurrencies.

Ukraine Legalized Cryptocurrencies

Amid the war (and crypto donations it received), Ukraine went ahead to sign the bill seeking to legalize cryptocurrencies. The bill tagged “On Virtual Assets”, established a legal and regulatory framework for the operation of cryptocurrencies (and related activities) into law. The Ukrainian National Securities and Stock Market Commission is charged with the onus of regulating the country’s crypto space; determining the country’s policies on digital assets, issuing licenses to crypto firms and businesses, as well as acting as a watchdog monitoring the activities of businesses and firms in the space.

The Crypto Market Slipped Below Its Trillion Dollar Valuation

In June, the cryptocurrency market lost its trillion-dollar valuation after slipping below the milestone, for the first time since January 2021. This followed as cryptocurrencies continued to record new lows and decline as investors continued to lose interest.

Bitcoin Had Its Worst Month In June

Bitcoin had its largest-ever monthly fall after experiencing a series of fluctuations in June. With a decline of over 40 percent in the month of June, it was the biggest-ever decline experienced in over a decade. 

The G20 Announced Plans To Issue Global Crypto Rules In October

The G20’s watchdog, the Financial Stability Board (FSB), announced in July that it would propose global rules for cryptocurrencies in October. These rules were to act as a measure to keep the crypto sector which is associated with volatility, and structural vulnerabilities in check.

India Threatened To Ban Cryptocurrencies, Again!

In July, India’s apex bank “threatened” to ban cryptocurrencies in the country again. Cryptocurrencies were initially banned in India in 2018 and the ban was overturned in March 2020. Backing its decision to ban cryptocurrencies again, the Reserve Bank of India (RBI) cited concerns about the “destabilizing effect of cryptocurrencies on the monetary and fiscal stability of a country” and recommended, “for framing of legislation on this sector,” according to Minister of Finance Nirmala Sitharaman.

Cross-chain Bridges Lost Over $2 Billion To Hackers

As of August, a total of $2 billion worth of cryptocurrency had been lost to cross-chain bridge hacks in 13 separate hacks, according to Chainalysis. These hacks on cross-chain bridges accounted for 69 percent of the total crypto hacks that have happened this year, as of August. The first quarter of this year saw the most crypto hacks since 2021. Almost $1.5 billion worth of cryptocurrencies were stolen in the first quarter and 75 percent of these hacks were bridge hacks.

Between January and July, Crypto Hacks Grew By 60 Percent

According to a report from blockchain analysis firm Chainalysis, losses associated with crypto hacks surged almost 60 percent between January and July of this year, pushed by an increase in funds stolen from decentralized finance (DeFi) protocols. A total of $1.9 billion was lost to hacks between the period of January and July this year. A total of $1.2 billion was lost to hackers in the same period last year.

Binance Rescinded Its Decision To Acquire Bankman-fried’s FTX

Last month, the world’s largest cryptocurrency exchange Binance announced that it was acquiring its rival FTX before announcing that it was no longer going on with the acquisition. Binance had decided to acquire FTX after its CEO, Sam Bankman-Fried asked Binance for help, CEO Changpeng said. “As a result of corporate due diligence, as well as the latest news reports regarding mishandled customer funds and alleged US agency investigations, we have decided that we will not pursue the potential acquisition of FTX.com. In the beginning, our hope was to be able to support FTX’s customers to provide liquidity, but the issues are beyond our control or ability to help. Every time a major player in an industry fails, retail consumers will suffer. We have seen over the last several years that the crypto ecosystem is becoming more resilient and we believe in time that outliers that misuse user funds will be weeded out by the free market. As regulatory frameworks are developed and as the industry continues to evolve toward greater decentralization, the ecosystem will grow stronger,” Binance wrote in its statement. 

FTX Filed For Bankruptcy

Following Binance’s abandonment of the deal to acquire FTX, the latter’s CEO Sam Bankman-Fried resigned from his position as CEO, and also filed for bankruptcy for his company. FTX joined the increasing list of companies that had filed for bankruptcy this year, following the incident with Binance.

Mark Morbius Predicts Bitcoin Falling To $10,000 In 2023

Veteran investor, fund manager, and founder of Morbius Capital Partners LLP Mark Morbius predicts Bitcoin slipping to $10,000 in 2023. The experienced investor had previously and accurately predicted Bitcoin’s drop to $20,000 this year and is now saying that the world’s biggest cryptocurrency is not far away from declining to $10,000 after breaking technical support levels of $18,000 and $17,000. University of Sussex finance professor, Alexander Carol had also predicted Bitcoin slipping to as low as $10,000, only that she predicted it for 2022.