A myriad of events in 2022 overshadowed the crypto industry. This left many investors, regulators and governments wondering whether they had seen the worst of the industry pitfalls and what is expected come 2023.
According to PrivacyAffairs, cryptocurrency scams were reported at US$4.3 billion by November 2022. A December 9, 2022, CoinDesk crypto staff layoff compilation estimated that over 26,000 jobs were lost in the crypto industry.
Several crypto companies struggled to stay afloat, some were closed, and others filed for bankruptcy. Notable among these were Argo Blockchain, BlockFI, Celsius Network, Compute North, Core Scientific, FTX, Terraform Labs, Three Arrows Capital and Voyager Digital.
2022 also saw most of the major cryptocurrency prices heading southward. The major cryptocurrency, Bitcoin, started trading at around US$47,000 and closed the year at just under US$17,000. Similarly, Ethereum, the major altcoin, started the year trading at around US$3,800 and closed the year at around US$1,200.
Most of the world economies were hit by high inflation in 2022. The annual inflation rate hit a record high of 9.1% for the United States in June 2022. Similarly, consumer price inflation in the Euro Area reached a record high of 10.6% in October 2022. The US Fed, the European Central Bank (ECB) and many other central banks hiked their key interest rates in 2022 to curb rising inflation. Cryptocurrency prices were hit as markets adjusted to higher interest rates.
2022 witnessed several global efforts aimed at regulating the crypto industry. The Markets in Crypto-Assets (MiCA) regulation geared towards harmonising crypto asset rules in the EU is expected in early 2023. In the United States (US), several bills on crypto-related regulation were introduced and are awaiting Congress to pass them.
One of the major events of 2022 was the Merge of the Ethereum network, transitioning from a proof-of-work to a proof-of-stake consensus mechanism in September. Among the key benefits of this upgrade is the expected reduction in energy consumption of the Ethereum blockchain by over 99%. Ethereum co-founder, Vitalik Buterin, highlighted the roadmap for further upgrades to the Ethereum network: the Surge, the Scourge, the Verge, the Purge and the Splurge.
The year 2022 is now behind us. 2023 comes with optimism that the challenges of 2022 can only form a stronger foundation for the crypto industry going forwards. Crypto regulation is expected to come hard and fast. Major cryptocurrencies are mostly trading range bound as 2023 kicks off. Lessons learned will have a profound say in how crypto investors and other stakeholders approach 2023 and beyond.