Introduction
The year 2022 has undoubtedly been a difficult ride for the crypto industry. In the year 2022, the global economy struggled under geopolitical headwinds which included tightening of the regulation by central banks and other institutions worldwide. The US Stock Market alone has dropped 15% in its value; bond markets have fallen by 20%, and so have crypto markets by 50% after reaching their peak in 2021. As a result, from digital coins to regulations to market capitalization everything has been a roller coaster for the crypto market.
Growth In the Incubation Of Projects
At the beginning of the year 2022, the Web 3.0 projects which majorly included NFT, blockchain, metaverse, and gaming projects raised USD 29 billion. The funding raised during the year’s first half already outperformed the 2021 figures. As a result, the blockchain service category witnessed consistent investments and received the most grants with 592 deals followed by DeFi and GameFi.
Bitcoin in 2022
2022 wasn’t the best year for Bitcoin (BTC) and other cryptocurrencies. During the year Bitcoin fell by 65% from i.e. $46000 in January to $16800 in December. However, Bitcoin also rose to its highest at $47,000 during March. In the mid of the year, during May the prices of Bitcoin dropped to $30,000 and $18,000 in June. After which the Bitcoin prices started recovering in September by hitting $22,000.
Ethereum Merge
Ethereum Merge which took place on 15 September 2022 is indeed the most anticipated crypto event. Popularly, known as Merge it is aimed at reducing Ethereum energy consumption by 99.95% as it does not require energy-intensive mining rigs of POW and relies on validators to verify transactions. The experts say that the energy of Merge is roughly 1% of PayPal.
NFT Market in 2022
During the first half of the year 2022, the NFT market performed vibrantly with strong trading volumes. In May 2022, the OpenSea reached USD 544 million in daily volume and was driven by the collection of “Otherdeed for Otherside” by Yuga Labs, the same company that acted as the mastermind of Bored Ape Yacht Club (BAYC) NFTs. Despite the softer trading volumes several NFT Partnerships and Innovations have taken place in recent times. Such ash Crypto.com collaborated with A story to develop “Extraordinary Whales Club” which is a social NFT series.
Fall of FTX
The founder and CEO of FTX were considered an icon in the crypto ecosystem. However, in November 2022 FTX was badly hit by massive withdrawals amidst the reports that Bankman- Fried’s trading company Alameda Research lent funds to FTX’s customers. Also, the exchange faced a huge crash after Binance stepped away from its proposed deal. As a result, the FTX funds were blocked, the value of its FTT token plunged, and the CEO Bankman – Fried was arrested in December.
Adoption of Non –Custodial Wallets
As a result of FTX’s bankruptcy, the decentralized exchanges (DEXs) took a higher share of the total crypto spot trading volume. In November 2022, the DEXs took 14% of the spot trading volume which was merely 9% in October 2022. Alongside, it all leads to the adoption of non–custodial wallets such as Crypto.com, DeFi wallet, etc where users get more control over their funds, unlike CExs.
Collapse of Terra Luna
Terra’s LUNA, the known digital asset was once the one of top ten cryptocurrencies by market capitalization. As a result, Terra’s UST Stablecoin which is pegged to USD also strengthened in the course of time. However, in May, following the sign of instability and sell-offs UST fell and became zero. This led to panic selling and a price drop of UST and its sister cryptocurrency LUNA which traded at $120 in April and touched a value of less than $1 in May. The ripple effects of Terra’s collapse led to a liquidity shortage and led crypto lending platforms such as Celsius to stop customer transfers. Further, created a change of similar updates across the sector.
Increased Use Cases of Soulbound Tokens (SBTs)
The potential market for Soulbound Tokens has increased this year. SBTs which are the NFTs tied to individuals or entities are non –transferable and non–tradeable. It represents the holder’s social identity and contains the holder’s commitments, affiliations, and credentials. As a result, works like a Resume or CV. The adoption of SBTs can pave the way towards decentralized societies also termed as co–determined sociality. Here souls and communities would convene in a bottom-up manner. Alongside, will develop a trusted network for the real economy by establishing reputation and provenance.
Global Interest Rates
At the beginning of the year 2022, the central banks began to increase interest rates to slow inflation and support economic expansion by decreasing rates. This tightening effect of monetary and fiscal policies put tremendous pressure on emerging asset classes such as cryptocurrencies. As a result, the crypto market cap had fallen by $1 trillion and leading to a severe sell-off that began to unwind leveraged position of the crypto assets in the market.
Heading Towards 2023
Despite starting the year with a major boom, the crypto market faced several challenges due to macroeconomic conditions worldwide. Several projects and assets collapsed while others got a pathway to betterment. Thus, the year 2022 has been a tough roller coaster ride for crypto enthusiasts, traders, and investors. However, towards the end which saw the recovery phase, the monthly average adoption rate was 2.9%. Based on these market conditions it is predicted that global crypto owners would reach 600 to 800 million by 2023.
