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By Laxmikant Khanvilkar
2022 was a tumultuous year marked by high volatility for all asset classes across the board, making it a particularly difficult one for many investors. In what was a historic bear market for most global asset classes—stocks, cryptocurrency, bonds, and just about everything else was down.
Let’s take a look at a few of the most interesting trades of 2022 in cryptocurrency space. They too had their moments of anxiety that ended in complete disdain.
Investors were excited over the return prospect till Terra Luna’s debacle. TerraUSD (UST)— flawed stablecoin at the centre of the Terra ecosystem—depegged from the U.S. dollar in May this year. The move led to a $60 billion wipeout and the complete collapse of one of the largest hedge funds in the crypto space: Three Arrows Capital.
Luna, the Layer 1 token at the centre of the ecosystem, ended up dropping to zero value from $86 in just under a week. This event had contagion effects that affected the whole industry and led to hundreds of high-profile bankruptcies, insolvencies, suspended withdrawals, and more.
Investors in FTT, the native token of the now-failed FTX cryptocurrency exchange, have had a rough year. Throughout most of 2022, general crypto malaise hurt the token as reduced trading volumes and profits from FTX led to lower buy-and-burn numbers.
Cryptocurrency ecosystem witnessed another shockwave in early November. The whispers began that FTX wouldn’t be able to back withdrawals for users. Over the next week and a half, the value of FTT dropped more than 90% as it became clear that FTX had lent user deposits to other ventures related to FTX founder and now-former CEO Sam Bankman-Fried and used FTT to backstop users’ deposits. As the price fell, the house of cards came tumbling down, rendering FTT ostensibly worthless.
TerraLuna and FTX have shaken investor confidence profoundly. The shockwave felt across the board. Realising the danger and the risks facing the crypto landscape, investors started to withdraw funds.
Shiba Inu a quintessential meme cryptocurrency that had earned that reputation, not for its utility as a currency, has been a financial roller coaster for investors over the last two years. The token clocked a historic 43,800,000% return during 2021, thanks to the speculation that drove it and is now nursing a year-to-date decline of 76%.
The entire cryptocurrency industry is in a deep freeze right now, with its total value of $810 billion far below its all-time high of $2.9 trillion set last year.
With investors’ confidence in the crypto sinking, the street is abuzz with increased oversight and regulation to ensure the safety/security of investor money.
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