by Joe Robert

I have a Christmas gift for my readers, and I wrapped it. I wrapped all of the 2022 highlights of the sector, and I’ll share with you the same opinions I presented to my team.

In a nutshell: Bitcoin fell from an ATH of around $69,000 in November 2021 to $15,000 in 2022. It hadn’t dropped below $20,000 since 2020. We went deep into the so-called bear market, and now the market sentiment is fear, uncertainty, doubt (FUD), and contagion floating around.

The main events this year were:

January

NFTs hit their peak at $17 billion (in volume traded) in January, pushed by OpenSea’s astronomic valuation and Bored Ape Yacht Club. Since January, the market has tumbled over 95%, and is close to $44 million.

There are around 360,000 active OpenSea users who own NFTs, but 9% of them own approximately 80% of the total value of NFT items.

Lessons learned: the NFT frenzy has passed, and several users are at a huge loss, but the potential applications of NFTs might open an era of innovations in the future.

February

Russia invaded Ukraine in a major escalation of the Russo-Ukrainian War, which began in 2014. Over $69 million dollars were donated to Ukraine and NGOs through cryptocurrencies.

Lessons learned: crypto was helpful because people openly donated resources in a decentralized way. It also facilitated capital flight between countries and responded well to authoritarian regimes.

May

Luna crashed, its stablecoin Terra (UST) depegged, and it caused a $40 billion crash in the market. Three Arrows Capital, a crypto hedge fund, filed for bankruptcy and owed over $3.5B to creditors, which included Voyager (3.5 million users), BlockFi (1 million users), and other companies, which have also crashed as a domino effect.

Lessons learned: even the most reputable projects (Luna) and institutional players (Three Arrows Capital) can fail, and those events started to bring the urgency for proper due diligence and risk management processes.

July

The Central African Republic (CAR) accepted Bitcoin as a legal tender following El Salvador’s decision in 2021, but the reality of both countries is different.

In El Salvador, there are 4 million crypto users (65% of the population), while in the Central African Republic, the adoption is way smaller in a country of roughly 4.8 million people, just 11% of the population has internet access, and only 14% have electricity, so naturally, the minority of people can use it.

Lessons learned: this might have been the beginning of a trend of countries adopting cryptocurrencies from a legal standpoint.

August

Blackrock partnered with Coinbase and announced the launch of a new private spot Bitcoin trust.

Lessons learned: this was a relevant movement of an institutional player partnering with crypto companies and technology. Later, in November, Fidelity opened its crypto trading platform, and Visa partnered with Crypto.com. As we get more transparency in the sector, we might see a broader inflow of institutional capital.

September

Ethereum successfully merged from Proof-of-Work (PoW) to Proof-of-Stake (PoS) consensus.

Lessons learned: this was one of the most emblematic events in the crypto sector, proving that crypto shouldn’t necessarily be environmentally harmful. The Merge is one step ahead in Ethereum’s goal to increase security and scalability with lessened energy usage, which might lead other projects to do the same.

October

Elon Musk finally bought Twitter, thrusting the platform into a new era.

Lessons learned: Elon seems to have the goal of “cleaning up the mess” of Twitter’s previous administration. One of his goals is to eventually decentralize the platform and bring self-sovereignty back to users.

THE UK elected Rishi Sunak, a crypto-friendly prime minister.

Lessons learned: this movement might indicate that a part of the society believes and intends to embrace web3 technology in the future. We should watch for similar trends in key countries globally, especially the US.

November and December

In November, FTX, Alameda, and its related companies crashed. Binance stepped in and said it would buy the company, but the next day it walked away from the deal. The next day, FTX filed for bankruptcy. A few weeks later, in December, Sam Bankman-Fried was arrested in the Bahamas.

Closing Thoughts

Yes, 2022 has been a tough year for crypto, but all investors should be looking at this as a turning point in the sector. This year has taught great lessons to both individuals and institutional players, especially related to the control and ownership of assets (not your keys, not your coins), the proper analysis and due diligence of investments, and the regulations and transparency for clients for the whole sector.

The market is presenting what could be seen as generational buys a decade from now!