Is This the Last Crypto Winter

Commentary

2022 was the worst year for cryptocurrency. 

The industry is based on life support. The crypto Market has been rocked with scandals, mismanagements, bankruptcies and possible fraud. Investor sentiment and trust is possibly the lowest it’s ever been, even after the Mt. Hackers stole $460 million worth of Bitcoin equivalent in the Gox scandal in 2014.

It begs the question: Will this be the last crypto-winter?

No, I’m not predicting cryptocurrency market will be on the upswing from here. Is this the end of cryptocurrency market?

The total cryptocurrency market capitalization has dropped from $2.2 trillion down to $850 billion since the start of the year. This could be the most significant financial bubble burst ever recorded within one year. In the same span, Bitcoin—the largest crypto asset—has fallen around 65 percent.

The dramatic fall of this year’s stock market has been witnessed in 2011. FTX, a large international exchange, and the indictment of its founder and former CEO—and former crypto savant—Sam Bankman-Fried. BlockFi and Celsius are two of the top crypto lenders. Last year’s third-biggest stablecoin, TerraUSD, lost all of its value. Three Arrows Capital also went bankrupt, one of the most important crypto hedge funds. 

Most likely, however, you already knew about all this. Another question remains: What is the future?

Let’s begin by examining two external factors.

The first is macro. The forces that have driven crypto value lower this year—aside from potential fraud such as FTX—will likely persist. Inflation will not affect interest rates, which will put pressure on crypto and other risk assets. The world’s money supply will remain tight, which will reduce liquidity and allocate crypto to speculative asset types like crypto. The crypto market’s famed accessibility and liquidity, such as its 24/7 trading, also

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