the art & science of
FORECASTING
CRYPTO DOOMSDAY The year 2022 will mark the demise of cryptocurrency as we know it
W
hen forecasters get a prediction right, critics often chalk it up to little more than coincidence. But let’s give it a go: 2022 will bring the end of cryptocurrency as we know it. Begin with bitcoin. Its price can’t increase forever, and the parabolic rise in its value that began in December 2018 broke in November 2021. (See “End in sight?” below.) Whether bitcoin’s price continues to decline, trends sideways or recovers and moves higher, we can expect a bear market in 2022.
THE GREAT ALTCOIN PURGE What about ethereum and the thousands of other cryptocurrencies that aren’t bitcoin? During the last bear market in 2018, every altcoin declined more than 90% from its peak. Some plummeted 99%, and a handful went to $0. While the technology has improved and the best altcoins actually do something other than “go up,” every altcoin has problems—even the biggest ones. Ethereum can’t scale and costs too much for small users. ETH 2.0 keeps getting delayed and nobody knows if it will work as expected. New ethereum tokenomics screw up some DeFi (decentralized finance) protocols, and behindthe-scenes conflicts breed drama that developers may never resolve. Binance, a cryptocurrency exchange company, is a walking magnet for FUD by Mark Helfman (fear, uncertainty and doubt). Cardano, a public blockchain platform, doesn’t work. The leader of EOS, an entrepreneurial operating system for businesses, bailed on the project after raising $4 billion in an unregistered securities End in sight? offering. The cryptocurrency DOGE Can the price of bitcoin bounce back from a recent decline and find its way higher in 2022? Not likely. has an unlimited supply. SushiSwap, a decentralized exchange that oper100000.00 USD ates as an automated market maker, 60000.00 started as a scam. Early investors in 48810.79 Internet Computer (ICP), which facil40000.00 itates smart contracts, dumped their 24000.00 tokens on innocent newcomers at the peak of the last altseason, that brief 16000.00 period when money flows out of bitcoin 10000.00 into altcoins. Thorchain, a protocol that offers cross-chain liquidity, has 6000.00 suffered at least three hacks, but at least 4000.00 it works—unlike most projects. 2750.00 Don’t expect any of those early-stage, 1750.00 experimental technologies with uncertain product-market fits and novel struc1150.00 tures to hold up in a bear market. At least 750.00 bitcoin has users and proven technol510.00 2017 Jul 2018 Jul 2019 Jul 2020 Jul 2021 Jul 2022 ogy, and lots of people have a stake in its success. Most altcoins have none of that. Source TradingView Once the hype dies down, 2022 will
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