The year was full of blows for the industry, from the implosion and bankruptcy of Terra Blockchain to FTX’s collapse.
One year ago, cryptocurrency analysts were riding high on the success of 2021. They had big hopes for Bitcoin. Some of them saw the token reaching $100,000 by 2022. That’s still a long way from where the coin is now: $16,500.
Bitcoin lost over 60% in 2022 due to a hawkish Federal Reserve, scandals, and implosions of once-famous projects. This was its second-worst year on record and its third-lowest ever. Ether lost nearly 70% and the index of 100 largest coins dropped around 65%.
Matt Maley, Miller Tabak + Co’s chief market strategist, stated that people didn’t understand the importance of cryptocurrencies as an ‘easy money” asset class in 2020 and 2021. However, some cryptos will thrive and survive, while others will be able to move too far and too quickly after the Fed implemented its massive QE and zero interest rate policies. It will take much longer for crypto assets to realize their full potential, now that these programs are gone.
Fundstrat’s Tom Lee, at the end 2021, said that the coin could easily reach $100,000 by 2022 and that it was possible to hit the $200,000 mark. He said, “It sounds unbelievable, but it is very useful,” to an interviewer.
At the beginning of January, Goldman Sachs strategists had predicted that Bitcoin would reach $100,000 in five years, as it grew its market share over gold. Mike Novogratz, crypto advocate, had predicted that the token would reach $500,000 within the same timeframe. This projection was dropped at the start of December.
Noelle Acheson, author and editor of ‘Crypto Is Macro Now,’ stated that the price predictions for $100,000 and more showed how influenced most people still are by recency bias.
Cathie Wood from ARK Investment Management was perhaps bolder than anyone. She reiterated her Bitcoin goal of $1 Million by 2030 at the end November, which is roughly 6,000% more than current levels.
Wood said that sometimes you have to go through crisis to see survivors. Wood spoke to Bloomberg TV at the same time. We believe that Bitcoin will emerge from this with a rose-scented nose.
Many strategists misunderstood the Fed’s aggressiveness with interest-rate increases as it tried to reduce inflation. The rates of other central banks around the globe were also increased, making it difficult for crypto assets to be able to trade. This is a huge change from the low rates of 2021 and 2020.
In 2022, crypto-centric stocks were also wiped out with Marathon Digital Holdings Inc. and Coinbase Global Inc. each losing approximately 90%. Riot Blockchain Inc. lost 85%, and MicroStrategy Inc. was cut off by 74%.
Vetle Lunde (an Arcane senior analyst) wrote that 2020-2021 was a party with zero interest rates, which rewarded the most shrewd party members for taking extreme risks. He said that 2022 was a yearlong hangover and that fortune did not favor the brave. We entered a constant doom cycle, with default, fraud, and contagion.
The year was full of blows, from the implosion and bankruptcy of Terra Blockchain to the collapse of FTX. Lunde points to the fact that his firm’s proxy for ‘Liquid Tradingable BTC’ has fallen to June 2020 lows. Also, that exchange balances are also dropping, which could have implications for Bitcoin liquidity. Lunde expects that the market will calm down by 2023 but doesn’t see prices reaching their previous all-time highs in the stretch. However, Bitcoin could end the year higher than it began.
He said, “In 2022 the naked swimmers were exposed, and bad apples were eliminated.” “Over the past year, we have rediscovered an old Bitcoin slogan: trust no one.