2022 was a year of disassembling the crypto ecosystem's parts, pieces, and players gambling with code, leverage, and trust.
In the months ahead, our bias is that crypto will be put back together with better players, tighter regulations, and, most importantly, a restored sense of trust among global investors.
In this first month of the year, Bitcoin's price increased by nearly $8K in a matter of weeks.
We saw Amazon make headlines with its NFT initiative and opening up AWS to host a Layer-1 crypto project.
We also saw crypto-giant Digital Currency Group's Genesis Trading file for bankruptcy, causing financial strain to over 100,000 creditors, including top crypto exchange Gemini.
It may seem odd to many how crypto as an ecosystem still manages to stay alive. It's simple. There's the tech, and then there are the players capitalizing on the tech.
Blockchain technology is here to stay, which is the foundational tech of Bitcoin. How custodians, lenders, exchanges, protocols, dApps, and developers choose to capitalize on the tech is a different story. The story of 2022 was about greed and widespread mismanagement.
Even in the FTX collapse, the panic was about custody – get your crypto into your private wallet. Not about Bitcoin's relevance, tech, usefulness, or security.
So does this mean Crypto Winter is almost over?
More like it's under repair. Yes, we see hopeful signs and haven't lost our long-term outlook. However, we're not out of the woods yet.
With all the bankruptcy proceedings in play, if and when, these companies are ordered to sell the cryptocurrencies (Bitcoin, Ethereum, and other altcoins) locked on their platforms to repay creditors, then we could see another wave of downward sell pressure. It's too early to breathe a genuine sigh of relief.
Now the million-dollar question is will that sell pressure hit while we're hovering in the $15K - $24K range? Or will it happen later after the price clears $48K?
Will it be a prolonged, painful correction? Or a series of minor flash crashes in which the price bounces back a few days later? Time will tell.