In 2022, crypto owners had a tough test.
At the beginning of the year, the total market value of cryptocurrencies worldwide was 2.2 trillion dollars. At the end of the year, these figures are slightly below 800 billion dollars.
Last year, the industry’s euphoric highs descended into a bear market of epic proportions, bankrupting many of the industry’s major players. Or worse.
The fall in cryptocurrency prices began when central banks cut the cords on easy monetary policies, which primarily drove down risky assets, and problems multiplied from there – accounts were frozen, bankruptcies were declared, fraud was discovered.
As Yahoo Finance’s Jared Blikre points out, despite or because of crypto’s epic confusion, Yahoo Finance’s bitcoin (BTC-USD) quote page ranked eighth on this year’s most trending ticker page, behind major stock indexes like the S&P 500. Dow, Nasdaq and three megacap stocks: Tesla, Apple and Amazon.
In 2021, cryptocurrencies that powered Layer-1 tokens such as ethereum (ETH-USD), Avalanche (AVAX-USD), Solana (SOL-USD), Polygon (MATIC-USD) and Cosmos (ATOM-USD) stole the show.
This year, the fight for extraordinary returns has turned into a fight for the least losses. The results are more of a catch-up for cryptocurrencies than reflecting a clear theme of industry progress.
Ethereum (-68% YTD)
After outperforming bitcoin by 355% last year, ether (ETH-USD) became the 10th best performing cryptocurrency in 2022, falling less than 70% this year.
Despite its performance, the second-largest cryptocurrency stopped its Merge update in mid-September, moving from proof-of-work to stake-of-stake, proving to be one of the industry’s few success stories in 2022.
Technological prowess has also freed Ethereum core developers to dive into others initiatives designed to improve the protocol’s operational scalability, privacy, and use as a financial layer.
A decentralized banking layer and part of a technology platform, Ethereum still does not offer an important feature that allows investors to withdraw their staked deposits. As noted by Galaxy Digital research associate Christine Kim, Ethereum’s core development team has said that the protocol’s Shanghai upgrade, which includes the withdrawal of ETH coins, could be activated in March 2023.
Merge made the Ethereum blockchain 99.95% more energy efficient and deflated the ether supply.
Bitcoin (-65% YTD)
The world’s largest cryptocurrency fared better than some of its smaller counterparts, but was not immune to a market washout in 2022.
Bitcoin has fallen 76% from its November 2021 peak to $68,789 and is currently trading near $16,500.
Alex Thorn, head of research at Galaxy Digital, said he doesn’t think the market has changed its view of bitcoin (BTC-USD) since speaking to Yahoo Finance in April, when bitcoin traded at $41,000. a choice about a future where cryptocurrency is valued as digital gold” and “a protest against the insecurity of central banking”.
Between the peak of November 2021 and December 12, bitcoin investors recouped $213 billion in realized losses, according to data collected by cryptocurrency analytics platform Glassnode.
“Looking forward to next year, given the weakness in macro and monetary conditions, it is very difficult to see bullishness in bitcoin and cryptocurrency in general,” Thorn added.
Dogecoin (-60% YTD)
Widely held by retail investors, the original “meme” coin followed most of the crypto market in a massive selloff starting in the second quarter.
Still, Dogecoin fared better than many tokens in 2022.
However, unlike most major cryptocurrencies, Dogecoin (DOGE-USD) was already From its peak in May 2021 – when Elon Musk appeared on Saturday Night Live – it has fallen 64% through the end of 2021.
“People know it’s a joke. They like the joke,” Thorn told Yahoo Finance.
Thorn’s team published a paper on DOGE at the 2021 summit, citing a “general lack of development effort” and “no serious long-term story or use case.”
However, Thorn’s team found that Dogecoin had a “fair launch,” meaning it did not include a pre-sale or venture capital raising, which can be a red flag when insiders carry large stakes that put outside buyers at a disadvantage.
The cryptocurrency outperformed most others during the fourth quarter, largely due to Elon Musk’s purchase of Twitter, which users believe could have some benefits for Doge owners.
Ethereum Classic (-54% YTD)
Ethereum Classic (ETC-USD), which entered with a 53% loss, also benefited from speculation leading up to the Consolidation.
Although its usage and developer community is a fraction of Ethereum’s size, Thomas Dunleavy, senior market researcher at Messari, noted that the small-sized token regularly gains in value ahead of Ethereum-related software updates.
As the Ethereum Merger neared completion, skeptical investors looked to Ethereum Classic and other branches of the second-largest cryptocurrency as a hedge or insurance policy if the upgrade failed.
BNB (-53% YTD) and OKB (-17% YTD)
Exchange-linked tokens such as OKB (OKB-USD) and BNB (BNB-USD) have outperformed most cryptocurrencies this year.
BNB is a token associated with Binance, while OKB is a token for the OKX ecosystem.
However, as recent developments through the FTX crisis and the corresponding crash in its exchange token FTT have shown, the value of these tokens can change quickly based on the management of the respective crypto exchange.
Exchange tokens can give their holders special benefits, such as lower trading fees and the ability to vote on exchange decisions. Exchange tokens are also almost always linked to the success of the cryptocurrency as a business, serving in part as corporate capital.
Monero (-42% YTD)
As in previous years, the tension between transparency and privacy for cryptocurrency transactions is back in 2022.
Unlike Bitcoin and Ethereum, Monero (XMR-USD) gives users less censored transaction privacy by default without requiring the use of crypto mixing services.
Monero’s more modest sales this year suggest its feature as a privacy coin offers users more benefits than most cryptocurrencies on the market.
Tron (-28% YTD)
TRX (TRX-USD), the native cryptocurrency of the Tron blockchain, has outperformed most cryptocurrencies, losing less than a third of its value this year.
The token’s value, according to Messari’s Thomas Dunleavy, has largely benefited from the Tron ecosystem’s growing stablecoin volume. Supply burn of TRX is based on the level of transaction volume.
When 2021 superstar LUNA exploded in May along with its related stablecoin TerraUSD (UST), the Tron ecosystem launched its own decentralized stablecoin (USDD-USD). According to Messari, the network activity of the Tron ecosystem increased by 47% in the second quarter.
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