By Dipu Rai: As 2022 comes to an end, cryptocurrency traders worldwide are encountering a rough time. The collapse of cryptocurrency exchange FTX following the arrest of founder Sam Bankman-Fried, once the golden boy of cryptocurrency, only made matters worse. The Securities and Exchange Commission said Bankman-Fried, “orchestrated a years-long fraud” to conceal from FTX investors the diversion of customer funds to his crypto-trading hedge fund.
Despite these gloomy developments, some financial tycoons hope crypto will be the next generation for markets. "I believe the next generation for markets, the next generation for securities, will be tokenisation of securities," Larry Fink, BlackRock's chief executive, recently said.
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As the volatility in the crypto market increases and investors continue to dump risky assets, the future of supposed cryptocurrencies feels shaky.
After the 2021 bull run, cryptocurrencies saw a correction in the first month of 2022 as Bitcoin (BTC) and Ether (ETH) dropped around 20 per cent and 31 per cent, respectively. Now crypto prices have plunged, with Bitcoin hovering around $17,000, down more than 60 per cent from the beginning of 2022.
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However, a slight recovery was seen in October compared to September, an increase of about 1.76 per cent, the first rise since July, but still below the peak in March.
Standard Chartered Bank said in a note the price of Bitcoin could drop to $5,000 next year. “Yields plunge along with technology shares, and while the Bitcoin sell-off decelerates, the damage has been done. More and more crypto firms and exchanges find themselves with insufficient liquidity, leading to further bankruptcies and a collapse in investor confidence in digital assets,” Eric Robertsen, global head of research at Standard Chartered Bank, said in the note.
Bitcoin is an indicator of the crypto market with the largest market cap, and the rest of the cryptocurrency tends to follow its path. Fear of a global recession impacts equities and currencies. As a result, despite high trade volatility, some experts hope that cryptocurrencies will likely see some revival in 2023.
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