2022 was a year to forget for cryptocurrencies, Bitcoin included. Too many things were happening in the crypto market. It was a game of less rise and fall of enormous proportions. The last month of the year passed away quietly without many price changes owing to low volatility. 2023 is a new year, and market watchers are keen to know what is in store for them.
One of the biggest exchanges, FTX, collapsed in 2022. The founder was arrested and extradited. This has prompted renewed calls for better regulations in the cryptocurrency environment.
Among the many things that affected the prices of Bitcoin adversely, FTX’s fallout was probably the worst. The value of Bitcoin hit a two-year low in November at under $15,600. December, however, saw some stabilization with an increase of 1%. The Bitcoin price chart has gone volatile in 2022. The other thing that has had a pretty bad impact on cryptocurrencies, including Bitcoin, is the rising interest rates.
FTX fallout
The year had been chaotic for cryptocurrencies, but the climax happened in November. FTX, which was once a $32 billion worth crypto-exchange, filed for bankruptcy. The founder of FTX, Sam Bankman-Fried, was arrested in the Bahamas. The US SEC (Securities and Exchange Commission) filed a civil fraud lawsuit against Bankman-Fried for allegedly using the funds from FTX to support his hedge fund. More lawsuits amounting to criminal fraud were also filed against him.
Things happened so fast that people became afraid of the cryptocurrency ecosystem. However, people have now realized that whatever happened was due to fraudulent activity. They will have renewed interest and faith in the cryptocurrency ecosystem. They understood the crash was not due to an inherent weakness of cryptocurrencies. The sudden downfall brought on by the bankruptcy and failure of FTX is not something that will end the era of cryptocurrencies.
Other notable things that happened in December in the crypto market
The collapse of FTX triggered further fears when another cryptocurrency exchange called the BlockFi filed for bankruptcy protection. The trigger was such that one of the popular cryptocurrency exchanges, called Binance, experienced a mind-boggling outflow of $6 billion in just three days in the early days of December.
The fear kept increasing when the accounting firm Mazars withdrew one of its reports on the reserves of Binance from its website. The firm announced that they have stopped working for crypto-related companies. Binance is in a fix because of this problem. They have reached out to multiple agencies for a report on their reserves. The data will help reassure investors about their robustness in these trying times for the crypto industry.
About the increasing call for better regulation of the crypto market
The US government is looking closely into the developments of the cryptocurrency market. The FTX collapse has prompted the Biden administration to call for a session where they want to discuss increasing regulations on cryptocurrencies.
The deregulated nature of cryptocurrencies made them so famous. Blockchain, DeFi, and everything that has made people wonder about the unique and regulation-free nature of cryptocurrencies prompted many to invest in them. However, this massive FTX fallout has made people wonder about regulations.
2023 and the price of cryptocurrencies, including Bitcoin
If we look at the performance of cryptocurrencies in 2022, all we can say is that it has been dismal. 2018 is the worst year for the instruments. Investors are optimistic about a better year for Bitcoin in 2023. In 2019 the market rebounded after the dismal show of 2018. People are expecting the same this year. One of the factors that can help exchanges to make more money from the rebounding prices of Bitcoin is interest rate cuts. Some analysts think it can regain the price range of $30,000 or more this year. There is a positive outlook for many analysts and investors.
However, some also believe that 2023 will continue the same. The primary concern remains bankruptcies and liquidity issues from the continued interest hikes to control inflation. There are some bleak forecasts from such analysts that Bitcoin can fall further and end up in the range of $5,000. Although Bitcoin has existed for 14 years, many blockchains and applications are relatively new. These are still to evolve, which may cause the cryptocurrency to experience sluggish growth.
McClatchy newsroom and editorial staff were not involved in the creation of this content.
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