Amid the extended crypto winter, crypto investors’ hopes have turned pale. Just like pre-2021 levels with diminishing possibilities of strong movement in the cryptocurrency prices.
The end of 2022 is around the corner and the season’s cheer is expecting the crypto markets to give some good news. However, the reality may not be as pleasing as the community wishes. Bitcoin (BTC) and other cryptocurrencies have barely shown a hike in late December. However, for a healthy run, it’s necessary to show correction before further bull run. BTC hit $18,299.64 on December 15, 2022, as it suffers from the retracement phase before the Santa Claus rally.
In 2021, BTC hit its record-level high of $68,789.63 on November 10, 2021 but spiraled down with no traces of a Santa Claus rally. At the time of writing, BTC was trading at $17,029.2 with a volume of $22.43 billion. It recorded a decline of 75.19% from November last year.
The market turmoil created by FTX’s collapse has severely affected several crypto firms. The crypto lending firm BlockFi noted “significant exposure to FTX and associated corporate entities,” resulted in its bankruptcy filing under Chapter 11 on November 28, 2022. According to CNN, crypto exchange Bitfront, backed by Japanese social media app LINE, had been shut down last month. Also, the trading activity will be halted by the end of 2022 and withdrawal on March 31, 2023.
As per media reports, other big players affected by the FTX contagion are Genesis, GSR, Galaxy, GSR, etc. Also, prominent investors, including Temasek, Blackrock, Tiger, Sequoia Capital, Amber and Softbank have seen their investments sink to 0.
Industry is getting over the FTX mess, slowly
The global leader in crypto assets, Cumberland has observed that the industry is in recovery mode, discussing it in a long Twitter thread:
On December 12, Cumberland posted that “dozens of crypto companies are either severely curtailed or out of business, and the future of the industry is as cloudy as ever. That said, prices have reached a surprisingly buoyant equilibrium which is well off the lows of the year.”
Leading blockchain data & intelligence platform, Glassnode’s report of Year On-Chain Week 50, as on December 12, 2022, stated that the BTC market has acted calm this December. It also noted “Short-term realized volatility for BTC is currently at multi-year lows of 22% (1-week), and 28% (2-weeks), making for the lowest volatility regime since Oct 2021.”
“The realized loss experienced by Bitcoin investors across the past 6 months has been historic in magnitude. Profitability stress is starting to diminish after the event, but has resulted in a complete flush out of all excess liquidity attracted over the last 18-months. This suggests that a complete expulsion of 2021 speculative premium has now occurred,” Glassnode also remarked.