By almost any measure you can think of, it has been a hard year for people who are interested in cryptocurrencies. At the beginning of the year, the total value of the crypto market was $2.2 trillion. By mid-December, it was only $867 billion, which is a 60% drop.
But in January, things didn’t look nearly as bad.
Even though it’s hard to believe, the “Crypto Bowl” happened less than a year ago, when exchanges paid up to $7 million for 30 seconds of airtime to attract new customers. There was a reason to be hopeful.
In 2021, both Bitcoin and Ether had reached their all-time highs. Even meme coins like Dogecoin and Shiba Inu were doing well, thanks in part to people like Elon Musk and Mark Cuban who were fans of them. But by March, the crypto bros’ faith was put to the first test.
The Ronin network’s $625 million worth of cryptocurrency was stolen by hackers. And both FTX and Binance were attacked. The idea that blockchain projects were safe from attacks was put to the test by these brazen thefts.
When Russia invaded Ukraine, the community found a strange comfort in the fact that crypto was a good way to help the smaller country with money. In just one month, people who wanted to help Ukraine were able to raise almost $64 million through crypto donations.
But that trust in crypto didn’t last for long. By April, the Terra stablecoin had gone down to 35 cents, which was less than its $1 peg. Because of this, the value of the cryptocurrency LUNA dropped by 96% in one day. The crypto winter had begun. So far, there are no signs that the ice will melt.
U.S. regulators want stricter controls on cryptocurrencies, but they also show that they don’t really understand what these digital tokens are. In October, the European Union passed the Markets in Crypto Assets Regulation (MiCAR) bill, which will try to control the market for digital assets starting in 2024.
By October, the Securities and Exchange Commission was going after celebrities who promoted tokens. Kim Kardashian was one of the most well-known people they were going after. The influencer was told to pay $1.26 million because she blogged about a cryptocurrency without saying that she was paid to do so.
Then there was FTX in November. One of the biggest cryptocurrency exchanges ran out of money and had to file for bankruptcy. Its well-known founder, Sam Bankman-Fried, was fired. When he took over, Enron’s new CEO was shocked at how bad things were at the company.
In a bankruptcy filing, he said, “I have over 40 years of legal and restructuring experience.” I have been the Chief Restructuring Officer or the CEO of some of the biggest companies that have ever failed. I’ve worked in the business for a long time, and I’ve never seen such a complete breakdown of corporate controls and a lack of reliable financial information as I saw here.
The collapse of FTX and claims that money was stolen shook up a sector that was already unstable, and prices kept going down. All told, the value of crypto fell by $1.3 trillion this year.
Even Bitcoin fell a lot, ending the day on December 27 at $16,717.17. Compare that to the all-time high price of the token, which was $68,990.90 on November 8, 2021, or its price a year earlier, which was $50,640.42. Ethereum fell to $1,212.79, which is a long way from its high of $4,865.57 and a long way from when it was worth $4,037.55 on the same day in 2021.
There’s not much else to say about how bad 2018 was for crypto investors and fans. But sometimes it can help to see how cryptocurrencies have bounced back after big drops in the past.
If you still believe in Bitcoin and Ethereum, here’s how they closed on December 27 for the past nine years. There have been gains in some years. There have been drops like the one we had this year in other places.
It won’t take away the pain of the losses, but it could give some hope for the future.