Crypto — has the bubble popped?

Joshua Hughes, Editor, reflects on the world of cryptocurrency in 2022

IN a year that at times had been filled with hope and patience, crypto has had an overall sluggish performance. Coming off the hype surrounding crypto towards the end of 2021, many believed 2022 would bring further success and opportunity for people to adopt the new technology. However, what is now apparent is that the hopes and dreams of January 2022 couldn’t be further from the truth.

The one word that is on everyone’s lips at the moment is FTX. The failed crypto trading platform crashed in November 2022 with the ripple effect stunting confidence in nearly all cryptos. The crash of its native token, FTT, dragged the entire market to an all-time low, with Bitcoin trading at a two-year low.

The FTX crash tells many different stories when one looks into the collapse of one of the biggest crypto platforms in the world. The most significant being the genuine wilderness of crypto and the starkly apparent absence of a safety net for customers.

Despite banks and governments petitioning to introduce new regulations and restrictions on crypto, no such protections exist, which led to all of FTX’s customers losing out. With US bank Silvergate reporting that customers had withdrawn $8 billion worth of crypto deposits in 2022, it seems that crypto is heading in only one direction.

However, while crypto appears to be in a place from where it cannot recover, it seems that it is possible crypto could make a return in 2023. From a regulation perspective, the technology is at something of a crossroads. The overall USP of crypto

This makes it open to anyone wishing to transfer money around the world, including criminals. This is because crypto uses blockchain technology, making it extremely is that it is completely anonymous, and decentralised, giving consumers the option to avoid the traditional channels of cash flow. difficult to introduce regulations and create a safe environment for people’s money.

Therefore, either crypto introduces regulation and loses the feature that makes it most attractive to users or it continues to exist as a ‘wild-west’, increasing the risk for people’s money. It is difficult to provide a solution to this as it is ultimately an impossible question to answer. What is important to note however, is that crypto is just one small aspect of blockchain technology which still is yet to reach anywhere near its potential. While cryptos continue to trade at an extremely low price compared to the heights of 2021, there are signs in early January 2023 that the worst has passed.

Although it is important to take whatever crypto ‘experts’ prophesise as a huge year for crypto or bitcoin with a pinch of salt, it is extremely possible that crypto could go through a huge pump and return to the levels once seen at the end of 2021. Overall, with the FTX crash in 2022 leaving many disillusioned with the technology, 2023 will likely not provide any moments as dramatic as that, as crypto looks to rebuild its reputation.