A Year in Review: Ten Charts Summarizing the Crypto Market in 2022, a Year of Frequent Catastrophic Events

The Block has selected ten data charts to illustrate the cryptocurrency market in 2022. Bitcoin has dropped by approximately 65% since the beginning of the year. Although it has entered a bear market in sync with traditional markets, several catastrophic events in the cryptocurrency market have further exacerbated the collapse.

1. DeFi Hacks Surge

Prior reports indicate that at the end of March this year, the Ronin sidechain of Axie Infinity was exploited, resulting in a loss of 173,600 Ether and 25.5 million USDC, valued at approximately $616 million at the time.

This incident was later attributed by the U.S. Department of the Treasury to the North Korean cybercrime group Lazarus Group, seemingly stemming from an Axie Infinity engineer downloading a fake PDF job recruitment document.

2. Terra Collapse

With UST detachment and continuous user redemptions, the total circulating supply of LUNA tokens, which was only 340,000 in early May, surged to 176 billion from May 10 to 12, and skyrocketed to 6.5 trillion on May 13.

Even blockchain downtime could not halt the death spiral of UST and LUNA. Interestingly, Terra Classic, post-hard fork, still ranks 38th in market capitalization.

3. Tornado Cash Incident

Tornado Cash developer Alexey Pertsev has been under arrest by Dutch regulators since August this year, and the U.S. Office of Foreign Assets Control (OFAC) has sanctioned Tornado Cash.

Previously, the U.S. Department of the Treasury had also sanctioned specific Ethereum addresses, but the Tornado incident has attracted more attention from the crypto community for several reasons:

1. Does coding involvement constitute a crime?

2. Regulators sanctioning "DeFi protocols" for the first time.

3. Does OFAC's reporting obligation include dust attack transactions?

On the second day after sanctions were imposed, Tornado Cash's fund inflow plummeted to only $6 million, a sharp 78.5% decline, and the daily active user count also saw a significant drop.

4. ASIC Miner Prices Plummet

During the bull market last year, major mining companies aggressively acquired ASIC miners to boost computing power. However, as the trading market deteriorated, ASIC miner prices also plummeted. More importantly, "deleveraging" is not limited to crypto traders.

In fact, these miners also carry leverage, as mining companies mortgage miners to obtain loans. The Block suggests that this could pose another potential crisis for lending platforms.

5. Ethereum: The Merge

The Ethereum merge was completed on September 15, eliminating the reliance on miners to verify transactions and shifting to validation nodes. This resolves the criticized energy consumption issue, and the significant decrease in rewards has sparked anticipation for long-term ETH deflation among supporters.

6. Ethereum Futures Outperform Bitcoin

During August, Ethereum futures trading volume surpassed Bitcoin futures for the first time.

The Block researcher Lars Hoffman believes this is due to a large number of arbitrage trades surrounding the Ethereum merge.

7. GBTC Premium at All-Time Low

GBTC has been trading at a discount since the beginning of 2021, and the key turning point for the widening discount seems to be related to the SEC's refusal to allow GBTC to convert to a Bitcoin ETF spot.

Subsequently, Grayscale refused to provide proof of reserves in November, citing "security," which may deepen concerns about transparency. As of now, the discount is approximately -45.72%.

GBTC current analysis: "No Dawn for GBTC Conversion to ETF, What Options Does Grayscale Have Left?"

8. FTX Collapse

Whether it is users, the crypto industry, or stakeholders, the collapse of FTX has come as a surprise to many. The higher the trust in FTX, the deeper the damage to the crypto market.

As of now, the FTX incident is still unfolding, with BlockFi declaring bankruptcy at the end of November and suing FTX founder SBF.

9. Bored Ape Yacht Club vs. Punks

Two top NFT blue-chip projects, Bored Ape Yacht Club (BAYC) and CryptoPunks, have seen several intersections in floor prices this year. BAYC recently fell below CryptoPunks' floor prices in August and November.

10. Bitcoin Volatility Lull

The Block notes that Bitcoin's annualized volatility reached 27.06% on October 25, the lowest level since July 2020 when it dropped to 23.37%.

Low trading volumes and lack of volatility have led to stagnant price movements. However, this situation did not last long, as FTX declared bankruptcy a few weeks later, swiftly causing a market collapse.