Sunday 25 Feb 2024
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This article first appeared in Wealth, The Edge Malaysia Weekly on January 30, 2023 - February 5, 2023

CoinGecko, the world’s largest independent cryptocurrency website, released its 2022 Annual Crypto Industry Report on Jan 17, which painted a rather gloomy picture of the crypto industry last year.

Dubbed another “crypto winter” by many, it was a terrible year for industry players and investors. According to the report, the crypto market had been trending sideways with a market capitalisation of US$1 trillion and below. As at the end of last year, it was worth US$829 billion (RM3.6 trillion), 64.1% less than the US$2.3 trillion at the start of the year.

Adding salt to the wound was the fact that Bitcoin performed poorly against other major asset classes by shedding 64.2% of its value. The S&P 500 and the Nasdaq were down 20% and 34%, respectively, while gold was down 1%. The “digital gold” fared much worse than real gold in last year’s market.

The report also noted that the collapse of FTX, one of the world’s largest crypto exchanges before its downfall at the end of last year, impacted over a million depositors, creditors and investors. It says “more dominoes are likely to fall in the coming months”.

There is little doubt that 2022 will be remembered as a dark year for crypto investors. Among others, FTX was found to have dipped into its customers’ funds to prop up its trading business, a serious violation of corporate governance.

Three Arrows Capital, the crypto hedge fund that managed about US$10 billion in assets, went bust on the back of the Luna and TerraUSD sagas. Other renowned firms, including crypto lending firm Celcius and crypto brokerage firm Digital Voyager, were also brought to their knees.

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