The Bitcoin cryptocurrency has lost more than 60% by the end of 2022, after being severely affected by the Federal Reserve's monetary tightening policy, as well as a series of scandals and explosions of crypto projects.
According to Arabiya.net, Bitcoin's performance during 2022 is its second worst annual performance ever, and only the third year in which it recorded a decline in its history.
Other cryptocurrencies also suffered, with Ether losing nearly 70%, and the index of the 100 largest cryptocurrencies down nearly 65%.
A year ago, cryptocurrency analysts, after the successes of 2021, had high hopes for Bitcoin, as some saw that the cryptocurrency could reach $100,000 or more in 2022. But it surprisingly ended up falling to $16,500.
“People didn’t understand the value of cryptocurrencies as an asset class,” said Miller Tabak + Co chief market strategist, Matt Mali. Cheap money in 2020 and 2021 was a driving reason for the rally, thanks to the zero interest rate and massive quantitative easing policies. Now that these programs are gone, it will take much longer for the crypto-asset class to reach its full potential.
As for, Tom Lee of Fundstrat, who predicted at the end of 2021, that Bitcoin could easily reach $100,000 in 2022 and that the $200,000 range is achievable. He said in an interview with him: I know it sounds fancy, but it is very useful.
Meanwhile, at the beginning of January last year, Goldman Sachs strategists predicted that Bitcoin would reach $100,000 over 5 years as it took market share from gold. Cryptocurrency advocate Mike Novogratz said that Bitcoin could reach $500,000 in the same time frame.
But perhaps none were more daring than Arc Investments co-founder Cathy Wood, who at the end of November reiterated her prediction of a $1m Bitcoin target by 2030 — nearly a 6,000% increase from current levels.
Sometimes you need to go through a crisis to see the survivors, Wood said in an interview with Bloomberg. We think Bitcoin will emerge from this saga.
Many strategists at the beginning of 2022 misread the strength of the Federal Reserve's quantitative tightening policy, as it works to curb inflation. Other central banks around the world have also raised rates, creating an undesirable environment for risky assets like cryptocurrencies - and a big change from the strong days of 2020 and 2021, when rates were very low.
Cryptocurrency-focused companies were also hit hard in 2022, with Coinbase Global and Marathon Digital both dropping nearly 90%, and Riot Blockchain losing about 85%, the same percentage as MicroStrategy Inc.
From the internal meltdown of the Terra blockchain, which brought down a number of cryptocurrency lenders, to the bankruptcy of FTX, the year has been one blow after another for the industry.
