Bitcoin’s value stood at $47,733 on 1 January 2022 after dropping steeply from a peak of $64,400 in November 2021.<\/p>\n
Between 1 January and 19 December 2022, Bitcoin’s value dropped by approximately 67%.<\/p>\n
Over the course of the year, Bitcoin’s biggest drops occurred in May, June, and November. During these months, its value dropped by approximately 18%, 33%, and 17%, respectively.<\/p>\n
Several of the most significant Bitcoin-related events of 2022 are summarised below.<\/p>\n
Bitcoin closed out December 2021 with an almost 20% drop<\/a><\/strong>, the largest monthly loss it experienced that year since May.<\/p>\n That was also its worst December since 2013. And its 60% advance in 2021 marked its smallest gain for an up year since 2015, when it climbed “only” 36%.<\/p>\n Those tracking Bitcoin’s daily fluctuations say this is par for the course \u2014 the coin is known for its volatility and 2021 proved just as turbulent as any other.<\/p>\n The first of two major failures in the cryptocurrency market happened in May, when the TerraUSD (UST) stablecoin and its sister token Luna collapsed.<\/p>\n Terra was a system of algorithmic stablecoins, with its most famous, UST, pegged to the US dollar.<\/p>\n In theory, the stablecoins were supposed to be kept balanced through a seignorage<\/em> mechanism.<\/p>\n Essentially, the system allowed you to always redeem Terra stablecoins for their Luna equivalent and vice versa.<\/p>\n To mint $1 of a Terra stablecoin, the equivalent of $1 of Luna is “burned” \u2014 taken out of circulation. Conversely, Luna is minted when you “burn” or sell UST.<\/p>\n Terra’s algorithm allegedly came under attack in May<\/a><\/strong>. As the UST stablecoin lost its peg to the US dollar, people’s confidence in the system wavered and they sold their Luna and stablecoins simultaneously.<\/p>\n This caused the Luna price to drop while the algorithm drastically inflated the number of tokens in circulation, resulting in a further decline in the token’s value.<\/p>\n Ultimately, Luna’s value dropped too low to function as viable collateral for Terra’s stablecoins and the whole system imploded.<\/p>\n Luna’s price dropped to near zero after reaching a record of $119 a month earlier.<\/p>\n Other stablecoins were also affected, including the largest collateralised systems linked to the dollar and dollar-equivalent assets.<\/p>\n However, these returned to business as usual within a week.<\/p>\n In the wake of the disaster, the Terra community started a “Terra 2.0” blockchain, which kept the name and the Luna token while ridding itself of the algorithmic stablecoins and seignorage<\/em> algorithm.<\/p>\n They renamed the original blockchain and tokens Terra and Luna Classic, and they continue on.<\/p>\n However, TerraUSD Classic is currently worth $0.02 per token instead of $1.<\/p>\n Luna Classic trades at fractions of a penny ($0.0001 at the time of publication). However, due to the sheer number of tokens in circulation, it remains one of the top 50 cryptocurrencies by market cap.<\/p>\n Terra’s collapse sent shockwaves<\/a><\/strong> through the cryptocurrency market, knocking some $300 billion off the sector’s nearly $1.7 trillion market cap at the time.<\/p>\n In June 2022, Bitcoin plunged<\/a><\/strong> through several closely watched price levels to the lowest since late 2020.<\/p>\n The declines were attributed to deepening stress within the cryptocurrency industry following further monetary policy tightening.<\/p>\n The cryptocurrency declined by as much as 33% in a single week \u2014 from 11 to 18 June.<\/p>\n Genesis’ head of market insights, Noelle Acheson, described a liquidation cycle that drove Bitcoin prices and sentiment surrounding the cryptocurrency lower.<\/p>\n “What we’re seeing is more liquidations driving prices and sentiment lower, which triggers more liquidations and negative sentiment \u2014 some flushing-out needed still, but this will at some stage exhaust itself,” Acheson said.<\/p>\n The cryptocurrency market was further rocked by the news that industry darlings Alameda Research and FTX were insolvent<\/a><\/strong>.<\/p>\n Founded by wunderkind and Effective Altruism poster child Sam Bankman-Fried, it briefly looked as though Alameda would be cleaning up most of the mess Terra’s collapse had created.<\/p>\n Alameda was buying up crypto companies that were over-exposed to the Terra ecosystem with the apparent aim of making customers whole.<\/p>\n However, it later emerged that crypto hedge fund Alameda, and sister company FTX, a centralised digital asset exchange, were themselves a house of cards.<\/p>\n The companies have since been accused of defrauding customers, and Bankman-Fried arrested<\/a><\/strong>.<\/p>\n Allegations have also surfaced that Bankman-Fried and his hedge fund may have orchestrated the attack on Terra, with the New York Times reporting<\/a><\/strong> that a US federal investigation is still in its early stages.<\/p>\n Bankman-Fried has denied the allegations, saying, “There is no evidence, because it didn’t happen.”<\/p>\n The ongoing FTX and Alameda drama caused Bitcoin’s price to drop below $16,000, and saw the cryptocurrency trade in a range between $16,000 and\u00a0$17,000 for most of November December.<\/p>\n![\"\"](\"https:\/\/mybroadband.co.za\/news\/wp-content\/uploads\/2022\/12\/Btcoin-chart-19-December-e1671434928395.jpg\")
<\/a><\/p>\nBitcoin closes 2021 with a big drop<\/h2>\n
Terra collapses<\/h2>\n
Bitcoin’s downward spiral continued in June<\/h2>\n
FTX collapse and fraud allegations<\/h2>\n