2022 is the beginning of a new “crypto winter” with the collapse of many famous companies and the price of cryptocurrencies plummeting without brakes.
Let’s take a look at the series of events that shocked the virtual currency community in the past year with Crypto Insights in this article!
The serious drop in the price of virtual currency
Just over a year ago, around November 2002, Bitcoin was called the future of money by investors and economists, while Ethereum (an open-source, public, and decentralization) is the most important development tool in the world. Coinbase exchanges are constantly setting new records and NFT is more explosive than ever. Optimistic investors predict that 2022 will continue to be the year of the cryptocurrency boom. However, exactly one year later, starting from the beginning of November 2022, the digital currency market plunged without stopping, losing three-quarters of its value when it fell from $3 trillion to $900 billion. Bitcoin from the inflated speculative asset has plunged steeply amid panic among investors.
Bitcoin price from its peak of nearly 68,000 USD has continuously dropped and by mid-December 2022 it is only around 17,000 USD, which is a decrease of 70% of the value. Some analysts say this token may even drop below $10,000. A series of thefts took place, the fear index of crypto players skyrocketed, and large companies suddenly went bankrupt making 2022 a bad year for the cryptocurrency market.
The crisis of Russia – Ukraine causes the cryptocurrency market to plunge
The cryptocurrency market plunged in February 2022, when the Russia-Ukraine crisis was more intense than ever. Earlier this session, the global crypto market cap fell 7.32%, to $1,660 billion.
CoinMarketCap data shows bitcoin down 6.14% to $36,862/BTC. Ethereum, too, dropped 7.99% to $2,525/ETH. All the biggest cryptocurrencies on the market have depreciated, similar to the meme cryptocurrencies Shiba Inu and Dogecoin.
These market observers said that, along with the Russia-Ukraine crisis, a widespread sell-off in financial markets due to high inflation concerns is putting great pressure on cryptocurrency prices.
Axie Infinity was attacked by hackers and lost more than 600 million USD
On March 29, Ronin Network announced the theft of this cryptocurrency and said it had frozen all transactions on the Ronin blockchain.
According to the Ronin Network, hackers exploited the Ronin network validator nodes for the company Sky Mavis, the publisher of the popular game Axie Infinity, and the Axie decentralized organization (DAO). The attacker used the hacked keys to perform a fake withdrawal from the Ronin bridge over two transactions that were found on Etherscan with 173,600 ether and 25.5 million USDC (electronically pegged to the US dollar), which is now worth the equivalent of more than $625 million.
Axie Infinity is an NFT-based game released in 2018, developed by Sky Mavis – a game developer founded with a mostly Vietnamese team. Approximately 35% of Axie Infinity’s 2.5 million daily active players come from the Philippines. The attack also serves as a safety alert for crypto companies and users as attacks on cryptocurrencies like Bitcoin and Ethereum have skyrocketed in recent years.
The Fall of LUNA
May 2022 was a dark time for the virtual currency community when Luna and Terra’s stablecoin UST suddenly plummeted. Economic Times called the project’s demise a “massacre” for investors as the token’s price dropped by 99.6%. Luna’s price from a peak of $86 on May 4 fell vertically down to $0.005 as of the morning of May 13. While players are bewildered by almost losing everything, many experts point to a serious crisis, when users lose confidence and regulators can squeeze the operation of stablecoins, putting the entire market at risk.
The collapse of Luna and TerraUSD not only caused investors to lose all their money, caused Bitcoin price to drop, and the crypto market to plummet, but also covered the future of the virtual currency market in the second half of 2022. a dark cloud. The Luna disaster created a “domino effect”, affecting several leading companies in the cryptocurrency market.
At the end of June, the investment fund Arrows Capital (3AC) defaulted on a loan worth more than 670 million USD in cryptocurrencies, with the cause being an investment in Terra. In early July, exchange Voyager Digital also filed for bankruptcy with an estimated $10 billion in debt. A week later, Celsius Network – the world’s leading cryptocurrency lender – collapsed.
Three Arrows Capital Cryptocurrency Fund Goes bankrupt
The collapse of Three Arrows Capital is related to the May crash of terraUSD (UST), one of the most popular stablecoin projects in the US. The stability of UST depends on a complex chain of programming with a commitment to always keep the price despite fluctuations in the crypto market. Investors are intrigued with annual returns of up to 20%, a rate many analysts, including Alkesh Shah, Bank of America’s crypto and digital asset strategist, say. unsustainable.
The sell-off caused by UST and its brother token LUNA cost crypto investors $60 billion. Nik Bhatia, a professor of finance and economics at the University of Southern California, describes it as the first domino to fall into a “prolonged string of cheating nightmares”.
3AC says it has invested $200 million in LUNA. Other reports put the investment at around 560 million. Whatever the exact number, it becomes worthless when the project fails. The incident rocked confidence in the industry and sent the crypto market sliding.
The collapse of 3AC triggered a liquidity crisis in the market and spread at breakneck speed. One thing that makes 3AC’s collapse so “monumental” is that the company has borrowed money from all of the biggest lending platforms in the industry, leaving these “creditors” also insolvent. account. Some of them had to announce to stop or limit the withdrawal feature such as Finblox, Babel Finance, Bancor, Voyager, Coinflex, Vauld, CoinLoan,…
The Bankruptcy of FTX
Before its collapse, FTX was valued at around $40 billion with over 1 million users. The news of FTX’s bankruptcy had a severe effect on the entire industry. Investors rushed to sell off and leave the FTX exchange. With FTX Token alone, after one night on November 8, the value of this token dropped by more than 75% when investors fled. From a price of nearly 23 USD, FTX Token has dropped to about 3 USD.
The collapse of FTX also made many domestic investors miserable. At cryptocurrency forums, many lamented because they could not withdraw capital on the FTX exchange. Many people are sharing that they lost tens of thousands of dollars after FTX went bankrupt. After the collapse of FTX, hundreds of thousands of investors are not sure when and how to get their investments back. Up to now, FTX has not made clear its intention to pay creditors. Most individual investors are prepared to lose their money stuck on FTX.
Before going bankrupt, FTX made a name for itself in the crypto world. Almost every class joins this platform. The bankruptcy of FTX has led to many consequences related to a chain of related platforms.
In the nutshell, the crypto industry has mostly ended with more series of failures than hopes in 2022. While the opening to 2023 is optimistic for many investors, some experts still think the crypto market will see another plunge in the future. However, the fields of the metaverse, NFT, and DeFi are growing amid the crypto winter, and many companies are reaching into virtual reality and the blockchain industry.