2022 will have been a very bad year for cryptocurrencies with a collapse in prices and overlapping bankruptcies.
One of the industry’s key thermometers, the price of bitcoin, started the year above $40,000 and ended below $16,000. This is a decrease of 70%.
In total, the total market capitalization of the cryptocurrency market will end the year around $765 billion, almost four times less than at its peak in November 2021.
The interest rate hike by the US central bank from May, added to the war in Ukraine and the health situation in China, led to chain reactions: investors turned their backs on risky assets and drove down the experience.
The bankruptcy of the FTX platform caused losses for hundreds of companies that had entrusted their money to it or used its products. This demonstrates the fragility of a very rich but unregulated system. The financial authorities are still waiting for signals from the political world to establish a control structure and tighten regulations.
We asked Nicolas Van Zeebroeck, professor at the Solvay School of Economics and Management, to take stock of cryptocurrencies in 2022. “In 2022, two major events happened. The first is the very significant drop in cryptocurrency prices. And there has also been a drop in several exchanges, notably FTX, which went bankrupt, important investments and cryptocurrency holdings from investors around the world, but especially in the United States. It’s a trauma for this industry”he explains.
The specialist also answers the question of whether cryptocurrencies are a good investment. “This investment should be designed like all risky investments. You should only invest in cryptocurrencies as in any volatile asset, only money that you can completely do without. However, unlike other more traditional assets, long-term cryptocurrencies represent a real gamble. They will increase in value only if their model manages to impose itself and if it is not overtaken or perverted by the traditional financial system. We must accept the consequences, which is that this effort may be short-lived”, points out Nicolas Van Zeebroeck.
How will cryptocurrencies develop in the future? Here is the statement from economist Bruno Colmant. “I think that states will not tolerate for very long that these currencies coexist with state currencies that are legal tender. Furthermore, central banks, including the European Central Bank, are investing colossal amounts to launch digitized, digital currencies. In 2-3 years we will see the emergence of digital euros. They will be available to individuals. On that day, there will be state competition for cryptocurrencies, which will probably suffer a big loss “warns the economist.