A new “crypto winter” began in 2022, with high-profile businesses collapsing everywhere and the value of digital currencies plummeting dramatically. The year’s events caught many investors off guard and made it more difficult to forecast the price of bitcoin.
The crypto market was flooded with analysts speculating fervently about where bitcoin would go next. They were frequently optimistic, but a few predicted the cryptocurrency would fall below $20,000 per coin.
But in a turbulent year for cryptocurrencies, high-profile company and project failures send shockwaves across the industry. It came as a surprise to many market observers.
Early Signs of The Crypto Winter
The first sign of trouble came in May with the demise of terraUSD, also known as UST, an algorithmic stablecoin meant to be pegged 1:1 to the US dollar. Luna, the sister token of terraUSD, also failed. Hence, companies exposed to both cryptocurrencies received damage. Due to its exposure to terraUSD, Three Arrows Capital, a hedge fund with bullish views on crypto, entered liquidation and filed for bankruptcy.
Investors had to deal with rising interest rates and cryptocurrency failures. All of this has put pressure on risky assets like stocks and cryptocurrencies.
Since hitting an all-time high of nearly $69,000 in November 2021, Bitcoin has fallen by about 75%, and the market value of all cryptocurrencies has lost more than $2 trillion. Bitcoin was trading at slightly less than $17,000 on Friday.
At a tech conference in Amsterdam in 2018, Tim Draper predicted that by the end of 2022, the price of one bitcoin would reach $250,000. The well-known Silicon Valley investor sang an onstage rap about bitcoin while sporting a purple tie with bitcoin logos.
It seems highly unlikely that Draper’s call will come to pass after four years. The founder of Draper Associates said earlier this month that $250,000 “is still my number” but that he is extending his prediction by six months when asked about it.