The crypto market in 2022 was a roller coaster of highs and lows, as the uncertainty of the previous year had left many investors feeling weary. By the end of the year, the total market capitalisation of all cryptocurrencies had fallen by more than 70%, leading to losses of over $2,2 trillion.

“Crypto winter” is the industry term for the chill that descended on the market in 2022, and contagion was the name of the game. After the collapse of the TerraUSD algorithmic stablecoin, major crypto players fell like dominos: Three Arrows Capital, Voyager Digital, Celsius Network, FTX, BlockFi.

The collapse of the crypto market in 2022 was largely attributed to the collapse of two major players, FTX and Alameda. Both suffered devastating losses due to a combination of mismanagement, poor decision-making, and a lack of regulatory oversight.

The collapse of FTX in particular was a major blow to the crypto market. The exchange had built a reputation as a reliable and secure place to trade crypto assets, and its failure sent shockwaves throughout the industry. In addition to the losses incurred by traders on the exchange, its collapse also led to the liquidation of hundreds of millions of dollars in assets.

The FTX fiasco ensnared some of the biggest names in finance, including hedge funds and venture capital backers that held equity stakes in the group’s entities. Firms including SoftBank Group, Sequoia Capital and Temasek wrote down the value of their FTX shareholdings to zero as FTX collapsed.

The crypto market was also hit hard by the bankruptcy of the Terra, which had been one of the largest and most-used for trading and investing in digital assets. The platform had been a major source of liquidity for the crypto market, and its failure caused significant losses to many traders.

In addition to the losses suffered by investors, the crypto market in 2022 was also impacted by a number of other factors. The market was plagued by a lack of regulatory oversight, which made it more difficult for investors to trust the exchanges they were using.

📈 7 lessons for 2022

1️. Even the biggest ones go bankrupt

The largest funds and manipulators turned out to be ordinary greedy “hamsters” with large capitals and insider information. But even this did not help Alameda, Terra, FTX, 3AC and others avoid bankruptcy. Don’t invest in projects just because there are big names behind it.

2. Invest in what you use

Protocols with cool innovative technology dropped by 95%+. Polkadot, Flow, Near broke the tops back in 2021, and now they have folded 10 times. Exchange tokens, ETH (TVL $23 billion) and TWT (top 1 mobile wallet) were less affected.

3. The cult of personality is a dangerous bet

Projects with a strong personality behind them depend on the leader. Do Kwon, Su Zhu, SBF — all once were on the lips of every crypto guy. Many funds have invested simply because “well, there’s Do Kwon or Sam.” In this regard, you should not blindly invest in projects if there is CZ or Vitalik Buterin.

4. Algorithmic stablecoins = pyramid scheme (for now)

• UST reset

• BEAN hacked

• USDN/USDD lost peg

• FEI/USN closed

You should not fly into stablecoins that offer 50–100% per annum. If you don’t know the source of income, you are probably the source. Hold USDT, BUSD, USDC and DAI. (Not financial advice)

5. Bridges are the most vulnerable place in the crypto

The biggest hacks were on bridges: Ronin ($624M), Binance Token Hub ($500M), Poly Network ($600M), Wormhole ($326M). Store assets in native networks if you don’t want to repeat the history of BTC on Solana. It now costs $844.

6. Do not risk 100% capital for a 10% return per year

In crypto everything = risk. Investors lost all their capital trying to earn 8% in dollars on FTX, 20% in UST, 5% in ETH on Celsius… If you delegate the storage of crypto to a centralised platform for a long period, you can say goodbye to them. Too unfavourable risk/reward ratio.

7. Don’t try to catch the bottom

You will never have a perfect entry point, and trying to catch the timing can turn into FOMO. A simpler strategy is to use DCA.

Don’t blame yourself for mistakes. Everyone who stays in the market will definitely earn. Some earlier, some later. Learn from the experienced, learn from your own and others’ mistakes. Treat every loss of money as tuition fees. An MBA costs $50-$60k per year. Crypto markets usually charge less for training.

Looking ahead to 2023, it is difficult to say what the future holds for the crypto market. The losses experienced in 2022 have certainly taken a toll on investor confidence, and it may take some time for the market to rebound. However, there are some positive signs that the market may be on the path to recovery. Investors should remain cautious and diversify their portfolios to mitigate risk. Additionally, those looking to invest in digital assets should research the companies they are investing in and make sure they understand the risks associated with them.

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