The crypto currency world will not be able to look back with undiluted pleasure in 2022, if I may borrow from Britain’s Queen Elizabeth. 2022 was the wrost year for crypto exchangers.
At the end of the year, investors were asking serious existential questions because of the succession of crashes, contagion, and collapses.
Considering that bitcoin, the most valuable crypto currency, hasn’t kept its head above water for more than a week at a time, it’s now down about three-quarters from its peak in November of $69,000.
Many of the 22,000-odd tokens and coins have been comatose for years, or even outright dead, and their market value is now less than a third of the peak in November 2021.
A brutal reality check for an industry that started 2022 with the dream of widespread mainstream institutional adoption, of bitcoin replacing gold as the world’s inflation hedge, as well as endorsements from Tesla Inc chief Elon Musk and celebration of non-fungible tokens worth billions of dollars.
The US Federal Reserve’s uber-hawkishness didn’t just slam crypto currency. It also caused the crash of a stablecoin called TerraUSD, which sparked a ‘Lehman moment’, when funds and brokers went bankrupt no doubt 2022 was the wrost year for crypto exchangers
Some saw the collapse of Sam Bankman-Fried’s FTX exchange last month as the end of the crypto era.
The importance of Crypto Currency
There are far fewer crypto currency enthusiasts predicting a bounce this time than in 2017, when bitcoin crashed just as spectacularly.
Regulators, who have largely avoided dealing with the crypto currency world or banned crypto trading, have turned 2022 into an “I told you so” situation.
This month’s modest bitcoin bounce has viewed by the European Central Bank as an “artificially induced last gasp before Bitcoin’s inevitable disappearance ”.
This year, mainstream finance has largely avoided contagion due to a few extenuating factors. Excessive lending, uncontrolled lending, and the fudging of billions of dollars have overwhelmingly occurred within the crypto currency environment.
While the idea that private crypto currency coins and decentralized finance can thrive while operating outside of traditional banking appears delusional, decentralization has become the order of the day.
In recent months, a number of policymakers as well as some crypto barons have called for regulations in light of the loss of confidence that consumers and institutions have in crypto currencies.
In 2023, what can we expect?
2022 was for many the worst crypto year ever
2023 will be harsh too
I believe it will be less harsh than 2022
2023 will mark the warm-up for the huge bull-run to come
A great year to hone your skills and to accumulate coins by being selective in your trades
2024 full risk on
— YORK780 (@YORK780) December 21, 2022
James Malcolm, a UBS strategist, points out that crypto currencies and micro-cap American stocks are increasingly correlated, as a testimony to the fact that bitcoin and other tokens can survive on the fringe of investment portfolios as niche, diverse assets.
“We shouldn’t dismiss this thing as doomed to oblivion simply because it contains elements that can serve other purposes, and a modest crypto currency market will definitely continue to thrive on the margins of markets,” he states.
crypto brokers and exchanges
The sort of regulation that investors need in order to feel confident dealing with crypto brokers and exchanges, whether it’s transparency or capital adequacy, may not be possible to put into place for months, or even years, in the near future.
“In a note summarizing Morgan Stanley’s discussions with the crypto currency industry, the bank said some asset managers are predicting a 10 to 15-year journey to mainstreaming digital assets.
By contrast, the traditional financial world could, over the next year, turn to the crypto currency malaise as an opportunity to up its game by acquiring platforms and assets from the blockchain world, issuing tokenized bonds and stocks or perhaps even creating more central bank digital currencies.
Using UBS’ Malcolm’s words, this just might go to show that crypto currency was intended to provide more of an evolutionary leap than a revolutionary development for the financial markets ”.
