Stepping into the year 2023, it’s time to pause and reflect on the accomplishments and struggles the global crypto community witnessed over the last 365 days. Starting from the very beginning of 2022, no investment strategy could help recover the falling portfolios across traditional and crypto ecosystems. January 2022 inherited a slightly collapsing market, wherein investments made on 2021 all-time high prices resulted in immediate losses.
For many, especially the new entrants, falling crypto prices were perceived as an end game. But what went widely unnoticed was the community’s resilience and accomplishments against a global recession, orchestrated attacks and scams and an unforgiving bear market.
As a result of falling prices, 2022 also inherited the 2021 hype around nonfungible tokens (NFTs), the Metaverse, iconic all-time highs for Bitcoin (BTC) and other cryptocurrencies.
Economies worldwide suffered massive inflation as the most influential fiat currencies succumbed to the ongoing geopolitical pressures. The fall of investor confidence in traditional markets seeped into crypto and the fall of ecosystems only aided the sour sentiments.
A year full of disruption
Amid poor market performance, the crypto community focused on strengthening its core. This meant releasing blockchain upgrades and introducing faster, cheaper and more secure features and capabilities — all driven by the consensus of the respective communities. As a result, 2022 was a milestone year for leading crypto ecosystems.
Bitcoin received a highly requested improvement for its layer-2 protocol Lightning Network (LN) protocol. The LN got improved privacy and efficiency thanks to a November 2021 upgrade called Taproot. Bitcoin’s Taproot upgrade saw various protocol-level implementations for improved privacy and efficiency. It also helped lower the database sizes, an essential factor in slowing down the exploding Bitcoin ledger size.
Announcing lnd 0.15 beta: To Taproot and Beyond! ♾️
Taproot + Musig2 support for better privacy + efficiency, Taro soon™
~95% database space reduction for new data
️ New pathfinding tool to choose speed vs. cost of payments
Read more: https://t.co/5pavMcpxBg
— Lightning Labs⚡️ (@lightning) June 28, 2022
By May 2022, Bitcoin was already halfway to the next halving, an event that reduces the mining rewards by half, the only way new Bitcoin gets released into supply. The reward for confirming Bitcoin transactions gets slashed by half every 210,00 blocks. The last Bitcoin halving event occurred on May 11, 2020, back when it traded at the $9,200 mark.
The total supply of Bitcoin is limited to 21 million by design. Therefore, a halving event further reduces the amount of Bitcoin that gets released into the market. A resultant scarcity due to the halving event historical worked in favor of Bitcoin price.
Adhering to the expectations of industry experts, Bitcoin rallied for several months to mark its all-time high by Nov 2021 and was able to retain its value well above $15,000 until the end of 2022, confirms data from Cointelegraph Markets Pro.
The Ethereum community welcomed the highly anticipated Merge upgrade, which saw the Ethereum blockchain’s transition from proof-of-work (PoW) to a proof-of-stake (PoS) consensus mechanism. The upgrade’s most significant impact was a drastic energy consumption reduction. The wider crypto community counts on this lower energy usage to reignite the interest in Ether-power sub-ecosystems, such as NFTs.
Crypto resilience vs. traditional markets
History proves that two factors play a crucial role in crypto market performance — the price of Bitcoin and investor sentiment. Both factors seemed to lack throughout the year.
The crypto ecosystem was plagued with a series of attacks, unprecedented sanctions and bankruptcy filings, which multiplied the impact of the global recession on the market. In addition to poor price performance, some of the most prominent scars for 2022 investors include the fall of FTX, 3AC, Voyager, BlockFi and Terraform Labs, wherein investors lost access to all their funds overnight.
Amid this commotion, entrepreneurs once loved by the masses ended up breaking the trust of millions, namely former FTX CEO Sam Bankman-Fried and Terra co-founder and CEO Do Kwon.
Despite the added hurdles, the Bitcoin and crypto ecosystem not only survived but also displayed a never-seen-before resilience. Traditional store-of-value investments such as gold and stocks too suffered a similar fate. Between January-December 2022, gold investors realized a net loss of 0.3%.
Major company stocks also performed poorly this year, which includes Apple (-25%), Microsoft (-29%), Google (-38%), Amazon (-49%), Netflix (-51%), Meta (-65%) and Tesla (-65%).
Bitcoin started strong with a $47,680 price point in Jan. 2022, but dwindling investor sentiment — driven by year-long rising inflation, energy prices and market uncertainties — managed to bring the prices down by over 60% by December.
Setting the stage for a stronger foundation
Time after time, bear markets have taken the responsibility of weeding out bad actors and offering a chance for promising crypto projects to display their true value to investors beyond the price point.
The noise around price fluctuations could not stop the Bitcoin network from strengthening its core against double-spending attempts, i.e., 51% attacks. Thanks to the widespread mining community, hash rate and network difficulty — two important computational power-based security metrics — reassured Bitcoiners that the blockchain network was well-protected. Throughout the year, the Bitcoin network consistently recorded new hash rate all-time highs and ended the year between the 250-300 Exahashes per second (EH/s) range.
Other prominent players in the crypto ecosystem also released the system and feature upgrades as they gear up for 2023. For Polygon Technology, an Ethereum-based Web3 infrastructure, it was the launch of zkEVM or zero-knowledge Ethereum Virtual Machine, a layer-2 scaling solution aimed at reducing transaction costs and improving scalability. Decentralized finance (DeFi) aggregator 1inch Network launched the Fusion upgrade for delivering cost-efficient, secure and profitable swaps for crypto investors.
El Salvador’s legalization of Bitcoin did not go unnoticed, especially considering that the country’s Bitcoin procurement from 2021 shared the same fate as other crypto investors. Regardless, El Salvador President Nayib Bukele doubled down on this decision as the country announced purchasing BTC on a daily basis from Nov.17.
We are buying one #Bitcoin every day starting tomorrow.
— Nayib Bukele (@nayibbukele) November 17, 2022
One of the immediate impacts of this move is a reduction in El Salvador’s average buying price. A planned purchase of Bitcoin dips combined with a subsequent market recovery makes the country well-positioned to offset the unrealized losses.
In countries with high inflation, Bitcoin helped numerous individuals retain their purchasing power.
Expect a return of the hype
While 2023 will not be fortunate enough to witness the upcoming Bitcoin halving, it will play a crucial role in the crypto ecosystem’s comeback. With aggressive blockchain upgrades, updated business strategies and investors’ attentiveness back on the menu, the ecosystem is now gearing up for the next wave of disruption.
For investors, 2023 will be a year of recovery — from losses and mistrust to self-custody and informed investments. “Making it” in crypto is no longer just about becoming an overnight millionaire; it is about creating, supporting and preaching a fresh take on the future of money.
Bitcoin Has Entered Into The Early Bull Phase — Crypto Pundit Avers ⋆ ZyCrypto
Ki Young Ju, the CEO of data analytic firm CryptoQuant is convinced that Bitcoin is on the cusp of a major lift-off as crypto traders continue to switch from a risk-off to risk-on mode.
Earlier yesterday, Young tweeted that Bitcoin had “entered into the early bull phase”, suggesting that the top cryptocurrency by market capitalization could be preparing to push higher. Despite plunging by roughly 77% on the back of macroeconomic headwinds and a wider route in the crypto industry last year, Bitcoin has had a good run so far this year. This month alone, the crypto asset’s value grew over 40%, fully recovering from the FTX-induced sell-off and perching above levels last seen in August.
According to Young, whereas the asset’s price could pull back following the recent pump, there is a higher chance that it will continue to rise as various metrics turn positive. Highlighting the MVRV ratio, a profit and loss indicator that measures if the bitcoin price is undervalued or overvalued, the pundit noted that most investors were still underwater, reducing the incentive to sell.
Typically, when MVRV is above 3.7 (red area), bitcoin is said to be overvalued (market tops), and when it is below 1 (green area), bitcoin is said to be undervalued (market bottom). Recently the MVRV indicator moved above 1 (1.07), signalling the beginning of a bull cycle.
In Young’s words;
“No one would want to sell here at a significant loss. If someone sells a lot, it’s highly likely forced & unwanted selling due to bankruptcy, government-seized coins, etc.”
On Wednesday, Young also stated that there was a likelihood that wealthy investors would purchase struggling US-based Bitcoin (BTC) mining companies and their crypto holdings at a discount this year, preventing further miner capitulation. According to him, such acquisitions would significantly remove systematic risks associated with the mining sector, igniting a bullish storm for BTC and other cryptocurrencies.
“BTC miner capitulation might play out differently this time. Less likely, but it could be bullish if someone(s) acquires US-based Bitcoin mining companies and their crypto holdings at a significant discount this year,” he said.
Notably, the total supply of BTC in loss hit a 9-month-low this week, the lowest since April 2022, when Bitcoin was trading in the $40,000 range. Cryptoquant noted that “every time the supply in loss reaches values above 50%, capitulations occur, and price bottoms can be identified along Bitcoin’s history.” Currently, 32% of Bitcoin’s total supply is in loss after dropping from about 55% a month ago.
At press time, Bitcoin was trading at $23,049, up 0.14% in the past 24 hours, according to data from CoinMarketCap.
FTX Attorneys To Drag SBF’s Parents And Brother In Questioning About Their Personal Wealth
The tragedy of FTX appears to be becoming more personal, as the bankrupt exchange’s legal counsels are now seeking to drag the founder’s family members and grill them about how they established their affluence.
In a court filing, FTX attorneys requested that Sam Bankman-Fried’s parents, Joseph Bankman and Barbara Fried, testify under oath and produce financial papers regarding their personal fortune as part of the company’s effort to reclaim funds that may be used to repay creditors.
Gabriel, the brother of former FTX CEO Bankman-Fried, will also be questioned in court over any financial benefits he may have gotten from the company.
SBF, although being collaborative to the point of spending the rest of his life in prison, has neglected to provide federal prosecutors with all the necessary information regarding the diverted money, resulting in the current situation.
Lawyers Seek Answer From SBF Family If They Received Money From FTX
In light of claims that FTX shifted billions of dollars in investor cash to prop up his Alameda Research trading unit, federal authorities have accused him with fraud. SBF entered a not-guilty plea.
According to reports, other FTX executives may be subject to the same inquiry in an attempt to locate assets associated with the bankrupt cryptocurrency exchange.
Sources also have it that Bankman-Fried’s mother provided tax advice and recruitment assistance to FTX personnel.
FTX former CEO, Sam Bankman-Fried. Image: CNA.
Reportedly, his father served as a tax counsel to employees of the company and provided recommendations for the appointment of the company’s legal team.
Supposedly, Gabriel established a lobbying group and housed its operations in a mansion worth several million dollars not far from the U.S. Capitol.
It has been stated that his mother and brother are not helping with the investigation that is currently taking place into FTX.
Reuters reported in November that Bankman-Fried’s parents were signatories on a $16.4 million residence in the Bahamas, which was designated in property records as a “holiday home.”
FTX Owes Thousands Of Creditors Money
SBF faces eight criminal counts, including violations of campaign finance regulations and wire fraud. Since his extradition from the Bahamas to the United States, he has been under house arrest at his parents’ home. His trial is scheduled to commence in October.
After the collapse of the once-powerful cryptocurrency exchange in November, newly released bankruptcy records revealed thousands of creditors to whom FTX owes funds.
Wall Street stalwarts like JPMorgan and Goldman Sachs were included on the 116-page list of creditors, which also included firms, charities, people, and other institutions.
Crypto total market cap at $996 billion on the daily chart | Chart: TradingView.com
Meanwhile, FTX has opposed to a request from the U.S. Department of Justice for an independent inquiry into the company’s collapse, claiming that it is already conducting a comprehensive review that includes family members of SBF.
FTT, the native token of the FTX cryptocurrency exchange, had risen by 185% over the last 30 days.
At the time of writing, the altcoin was trading for $1,940, a decrease of approximately 22% from its previous price of $2,4.00.
-Featured image: Novel Suspects
Kraken Appoints CJ Rinaldi as Chief Compliance Officer
New CCO brings three decades of financial services experience
SAN FRANCISCO – Jan. 24, 2023 – Kraken, one of the world’s largest and most-trusted crypto platforms, today announced the appointment of CJ Rinaldi as Chief Compliance Officer. CJ’s decades of experience, both in traditional and decentralized finance, will further strengthen Kraken’s compliance program amid a fast-evolving regulatory landscape.
“To accelerate the adoption of cryptocurrencies around the world, Kraken must continue to navigate an increasingly complex regulatory landscape,” said Kraken’s incoming CEO David Ripley. “CJ’s impressive international career in both the private and public sectors positions us for continued success in meeting global compliance needs.”
CJ was previously Chief Compliance Officer at Blockchain.com, where he was tasked with building out global compliance frameworks and mitigating compliance risk for the firm. Prior to that, CJ had several roles at Deutsche Bank, including Chief Compliance Officer for its swap dealer and US broker dealer. He also served as Head of Business Line Anti-Financial Crimes Compliance supporting its investment bank, where he led a global team tasked with mitigating financial crime risk, implementing procedures and controls through effective and efficient operational solutions.
“Kraken’s commitment to security and transparency while building world class products and services makes it the gold standard in an industry that’s shaping the future of finance. It is trusted players like Kraken that will help ensure the crypto ecosystem operates within all regulatory frameworks” says Rinaldi. “I am excited to grow Kraken’s data-driven approach to compliance, ensuring the protection of both the company and its clients.”
Prior to Deutsche Bank, CJ worked at UBS Investment Bank in multiple roles, including as Global Head of Client Infrastructure. He also served as Senior Counsel in the Enforcement Division of the U.S. Securities and Exchange Commission.
For more information, please visit kraken.com or reach out to [email protected].
Kraken is one of the world’s longest-standing digital asset platforms. Globally, Kraken clients trade more than 200 digital assets and 8 different national currencies, including GBP, EUR, USD, CAD, JPY, CHF, AUD and AED.
Kraken was founded in 2011 and was one of the first exchanges to offer spot trading with margin, parachain auctions, staking, regulated derivatives and index services. In 2022, it launched a custodial NFT marketplace. Kraken is trusted by over 9 million traders and institutions around the world and offers professional, round-the-clock online support. Kraken was the first company to have ever conducted a Proof of Reserves audit and has since committed to undergoing Proof of Reserves on a regular basis.
Kraken is backed by investors including Tribe Capital, SkyBridge, Hummingbird Ventures, Blockchain Capital, Digital Currency Group, among others.
Kraken markets can be monitored and traded through the Kraken iOS and Android apps, and through the Cryptowatch iOS, Android and Desktop apps.
These materials are for general information purposes only and are not investment advice or a recommendation or solicitation to buy, sell or hold any cryptoasset or to engage in any specific trading strategy. Some crypto products and markets are unregulated, and you may not be protected by government compensation and/or regulatory protection schemes. The unpredictable nature of the cryptoasset markets can lead to loss of funds. Tax may be payable on any return and/or on any increase in the value of your cryptoassets and you should seek independent advice on your taxation position. For more information, please see our Terms of Service.
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