News hardware A year ago Bitcoin reached $54,000… A look back at this colorful year for crypto
On October 22, 2021, Bitcoin’s price reached its all-time high of €54,000 ($66,000). Today, at around $19,000, Bitcoin is struggling to rise again after the crypto sector’s ups and downs. It’s time for a look back!
- Bitcoin cycles
- Bitcoin: Undermining the Crypto Sector
- The crazy fall of the crypto terra Luna
- The collapse of giants like 3AC and Celsius
- Mass sale of certain giants
- Crypto platforms have been massively laid off
- NFTs and the Metaverse Pay the Price
First of all, you know that the crypto market is ultra-volatile – which generally characterizes an emerging sector (as evidenced by the advent of web industries in the 1990s to 2000s). Unlike publicly traded stocks, Bitcoin and cryptos are not regulated. It is therefore not surprising that these currencies are rising and losing value in record times.
While this market may seem uncertain, it is dominated by cycles of ups and downs – movements closely related to the health of stocks in the traditional stock market. Two cycles can be distinguished in the sector:
- Bear market -> Up cycle
- Bull market -> Down cycle
Specifically, in the land of investment, buyers are symbolized by the bull, while sellers are bears. The image of the bear stockpiling winter sums up the phases of depreciation well. As for the bull (bull), this indicates the determination to “rush” upwards.
In total, bitcoin has generally experienced four bull runs and three bear markets since its inception.
After experiencing a bull market following the covid crash in 2020, with Bitcoin soaring to $54,000, many agree that since November, Bitcoin and other cryptos have started their bear market.
A lot has happened since this event, in just 1 year…
Bitcoin: Undermining the Crypto Sector
Bitcoin has suffered the most from the decline in stock value and has also suffered from the situation in the crypto market. Stressful events in particular had strong consequences.
The crazy fall of the crypto terra Luna
Last May, the LUNA cryptocurrency started a monumental decline, scaring the entire crypto market. The cryptocurrency founded by Do Kwon went from $80 to $0, leaving many investors on the chopping block. This fall has been one of the biggest cryptocurrency crashes to date.
When it fell, LUNA dragged down its stablecoin, UST. In short, investors withdrew $40 billion from the protocol, causing the algorithmic system to derail, creating a downward spiral in the price of the UST stablecoin.
This event caused widespread panic, causing the price of the two cryptos to be worth less than a penny. After this incident, Bitcoin paid the price as the price rose from around €39,000 to €29,000.
But it’s not just the courses that paid the price….
The collapse of giants like 3AC and Celsius
Some companies in the crypto industry have suffered huge losses due to the downward trend in Bitcoin and cryptocurrencies. Highly exposed to Terra, the investment fund 3AC with Voyager digital or the crypto lending firm Celsius suffered from the snowball effect.
For example, 3AC lost about 191 million euros during the infamous crash of the cryptocurrency Luna and its algorithmic stablecoin UST. As a result, the company was put on hold for unpaid debts earmarked for a Voyager Digital, amounting to 617 million euros.
Mass sale of certain giants
These not very reassuring announcements also resulted in major market players having to give up due to the decline.
We are thinking in particular of the case of Elon Musk and his company Tesla. On July 20, the crypto world learned that the billionaire had said goodbye to 75% of his bitcoin holdings, or about $918 million. This announcement was not reassuring for investors, as the automaker was one of the companies with the most Bitcoin in capital.
Crypto platforms have been massively laid off
When they didn’t collapse on their own, some actors preferred to make their arrangements to face difficult times.
With the appreciation of cryptos, some companies in the sector grew very quickly… For this reason, many of them found themselves in a delicate situation when prices started to fall.
This is the case with BlockFi, a cryptocurrency lending and borrowing platform that has grown from 150 employees to about 850 in a single year. While Bitcoin had fallen to $20,000 last June, it announced to rebalance its balance sheet. the layoff of 20% of its staff to face the market decline.
The Crypto.com platform, which you have certainly seen on the jersey of the UFC organization, had also announced the resignation of some of its employees. The platform is trying to limit the breach, claiming that the company has reduced its workforce by 5%, about 260 people. In the process, Coinbase, the largest cryptocurrency buying and selling platform, planned to lay off 1,100 employees, or about 18% of its total workforce.
These massive layoffs have not spared players associated with the crypto market either. Indeed, Opensea, the first NFT platform, has also made agreements.
Last July, Opensea announced it was parting ways with 20% of its employees to resist the decline in value of tokens – closely correlated with the prices of cryptos, as it is necessary for them to buy them.
NFTs and the Metaverse Pay the Price
The web3 sectors have largely benefited from the rise of cryptos. In that sense, non-fungible tokens (NFTs) and the metaverse have suffered from the decline of Bitcoin and other cryptos. Obviously, these areas have largely lost interest since Bitcoin declined in value.
Currently around $19,000, for now the context seems unfavorable for Bitcoin to reboot all of its sectors. With a possible ban on Bitcoin mining and terrifying events for the markets (war, energy shortage etc.), the cryptocurrency is waiting for the green light to start again – but it doesn’t seem to be coming…
What is Bitcoin?
Bitcoin is primarily a payment network that allows users to exchange peer-to-peer currency. It is based on a digital currency called Bitcoin (BTC).
Thanks to blockchain* technology, Bitcoin offers the option of decentralized payment, i.e. without third parties or trusted authorities. With this in mind, Bitcoin was initially created as an alternative system to banks.
What is Blockchain?
The blockchain (literally chain of blocks) is in a sense the digitization of trust. Specifically, its code enables web users to exchange peer-to-peer value with a decentralized validation system. All actions performed on a blockchain are anonymous but transparent.
The mathematician Jean-Paul Delahaye explains that we can visualize this large archive as “a very large notebook, which anyone can read freely and for free, on which anyone can write, but which is impossible to erase and indestructible”.
Who runs Bitcoin?
If the name behind Bitcoin is known to everyone, Satoshi Nakamoto, then no one really knows the identity of its creator. Either way, it doesn’t matter, since Satoshi has little power over his code.
Bitcoin is indeed decentralized, so it does not depend on any entity. The network does not belong to anyone, because it is the consensus of the users that allows changing the protocol. Developers can only make changes if miners and network nodes agree with the choice.
How does bitcoin work?
The Bitcoin network works thanks to its users. To carry out user transactions, Bitcoin has used its blockchain. Specifically, each miner puts their machines (graphics card, ASICs) in competition to solve an equation to validate the correctness of the block. Thus, the Bitcoin network ensures that secure transactions are carried out that are monitored by various binary intermediaries.
How to get Bitcoin?
Anyone using their hardware computing power (graphics card, ASICs) is paid in BTC based on their involvement in the network.
In addition to mining, Bitcoin can be obtained on cryptocurrency exchange platforms against fiat currencies (Euros, Dollars, etc.) among others.
Where to store bitcoin?
Like cash, Bitcoin can be stored in virtual wallets, generally called wallets. There are different types of wallets:
Hot wallets are internet-connected storage solutions for private keys. In the form of software, these portfolios can be applications, extensions or even websites.
Cold wallets are a more secure alternative to cryptocurrencies. The private keys of these wallets are not stored online, so it is much more difficult for a hacker to access them. These wallets usually look like a USB stick or even paper.