Cryptocurrency values were surging to all-time highs by the end of 2021, with a global market capitalization of $3 trillion within reach. Bitcoin has risen to $68,000, prompting optimistic predictions that the currency will hit $100,000 in the first two quarters of 2022.
The year 2022 has passed, yet the forecasts have not come true. Instead, the industry was shaken by one controversy after another, wiping out a significant portion of the value of cryptocurrencies. After OpenSea, the largest NFT marketplace, suffered a bug attack that resulted in the loss of several pieces, non-fungible tokens (NFTs) were the first to fall victim.
Since then, transaction volumes for NFTs have dropped by more than half from their peak in 2021, prompting pundits to speculate that the bubble had burst. According to a recent DEXterlabs poll, more than half of NFT investors have yet to profit from their investments.
When TerraUSD (UST), the third-largest stablecoin, de-pegged from the dollar, things became even worse. Investors lost billions of dollars in the aftermath, and the entire Terra ecosystem disintegrated under the weight of the disaster. Regulatory investigations were conducted, revealing a bag of worms of negligence that threatened to put the entire business at odds with regulators.
Terra’s demise pushed prices even higher, but just as investors believed the crypto winter was coming to an end, Celsius broke the camel’s back by announcing that all withdrawals would be halted due to “extreme market conditions.” Bitcoin plummeted to an 18-month low of $22,000 after the announcement, as the cryptocurrency market cap fell below $1 trillion.
In the first half of the year, hackers rioted, with a particular focus on decentralized money (DeFi). Hackers lost almost $1.22 billion in the first quarter alone, which is eight times what they lost in the previous quarter. Immunefi’s CEO, Mitchell Amador, has warned that the industry could expect increasingly sophisticated attacks in the coming months.
“As DeFi grows in popularity, these kind of attacks become more lucrative,” Amador said.
Is it possible to turn things around in 2022?
At the time, there is a divide of opinion on whether the ecosystem can recover. For the pessimists, there is little reason to believe that things will improve for crypto, especially given Ethereum’s decision to postpone the “difficulty bomb” for the merger, which has placed uncertainty on the industry.Delta’s Kavita Gupta argues that she “strongly believes that we haven’t reached the bottom yet,” estimating that a bottom of $14K to $16K would be excellent. Others, like as Scott Minerd of Guggenheim, forecast a $8,000 bottom for the asset, while Peter Schiff warns against buying the plunge.
Optimists believe that laws will provide a clearer structure for the industry, despite the fact that things may appear grim for the overall industry at the present. Players have praised Cynthia Lummis and Kirsten Gillibrand’s latest bill, while the SEC’s approval of a spot Bitcoin ETF could be the spark for a trend reversal.
