Crypto at a crossroads after its annus horribilis
STORY: Crypto is at a crossroads after a truly annus horribilis.
Crashes, contagion, collapses came in such quick succession that investors were, towards the end of 2022, asking serious existential questions.
Bitcoin has not kept its head above water for more than a week at a time, and is down about three-quarters from November 2021's $69,000 peak.
It's been a brutal year-end reality check for an industry that kicked off 12 months earlier with big dreams.
They included widespread mainstream institutional adoption, bitcoin supplanting gold as the world's inflation hedge, endorsements from the likes of Elon Musk, and billion-dollar NFT valuations.
Instead crypto met with Fed hawkishness, the crash of stablecoin TerraUSD, and fund and broker bankruptcies.
Then came the collapse of Sam Bankman-Fried's FTX exchange.
-Why it matters-
Unlike after the bitcoin crash in 2017, there are far fewer diehard crypto buffs predicting a bounce this time around.
2022 belongs to the "I-told-you-so" regulators and central bankers.
They've largely either maintained an arm's length from the crypto world or banned trading in cryptocurrencies altogether.
-What it means for 2023-
Some like UBS strategist James Malcolm suggest bitcoin and other tokens could survive - if only on the fringes as a niche, diverse asset in investment portfolios.
But the sort of regulation that investors now need to feel safe dealing with crypto brokers and exchanges could take years to implement.
Instead, 2023 could see the traditional financial world and central banks using the crypto malaise to up their own game.
They might snap up platforms and assets in the blockchain world, or issue tokenized bonds and stocks.
Or maybe even roll out more of their own digital currencies.
