2022 is probably not the year of positive developments in cryptocurrencies. After years of partly extreme upward performance, things have been going steeply downhill for some time now. And in the largely unregulated cryptocurrency market, the powerful U.S. Securities and Exchange Commission SEC intervened in a regulatory capacity for the first time in April 2021.
The cryptocurrencies are traded and stored with traders and their platforms, and it is difficult for the customer to verify their seriousness. Transparency does not always exist, the market is largely unregulated, and government financial regulators are generally not competent.
The crypto boom peaked in November 2021. Assets of over US$240 billion were traded that month. Currently, the monthly volume is less than US$80 billion.
In May 2022, the Terra-Luna stablecoin fell to 10 US cents, coming from a high of US$120. The collapse destroyed US$45 billion in values. Subsequently, another stablecoin, DEI, got into serious trouble.
The best-known cryptocurrency is Bitcoin. In February 2011, the Bitcoin price fluctuated between 67 US cents and US$ 1.06, then in June 2011 the price was at US$ 29.58 and fell to US$ 2.14, in November the value had already risen to US$ 1,127. (Source: Wikipedia). Extreme fluctuations characterize cryptocurrencies. In the last ten years, however, the trend has been steeply uphill, with Bitcoin reaching its highest value to date at US$68,000 at the end of 2021 and then falling sharply to the current level of just over US$20,000.
In the course of the sharp price declines in 2021, crypto traders partially closed withdrawal and exchange functions. In June 2021, Hong Kong-based platform Babel froze assets; crypto hedge fund Three Arrows was unable to service a US$670 million crypto loan and declared bankruptcy in July; a lawsuit in New York’s Bankruptcy Court found that the firm’s management had fled and its assets were untraceable. In July, the Vauld platform froze assets and filed for bankruptcy shortly thereafter; the Voyager Digital broker also declared insolvency. Other companies followed.
