Crypto In 2022: The Worst Year For Bitcoin, Ethereum; Is This Beginning of The Fall of Cryptocurrency?

   2022-12-23 05:12

The year 2022 has been the worst year for the cryptocurrencies, the virtual assets including Bitcoin, Ethereum and Polygon saw sharp plunges multiple times in the current calendar year. The year also saw the fall of a major crypto exchange FTX due to the liquidity crisis. In India, crypto exchanges were also raided by authorities. Experts said that the downfall in cryptos will continue in 2023 also due to systemic issues in the crypto world.

Major private cryptocurrency Bitcoin has seen a massive decline of about 65 per cent in the current financial year to $16,833 on December 23, 2022, compared with about $47,600 at the beginning of the year (January 1). Similarly, Ethereum also crashed about 68.15 per cent year-to-date to $1,221 on December 23, compared with $3,834 on January 1, 2022.



Polygon or MATIC had stood at $2.56 apiece on January 1, 2022, and has now plummeted to $0.80 on December 23, 2022.

In 2022, all the cryptocurrencies witnessed high volatility and saw a 70-80 per cent swing in their highest and lowest prices during the year.

Vivek Iyer, partner and leader (financial services risk) at Grant Thornton Bharat, said, “The calendar year 2022 was probably the worst year for cryptocurrencies, due to the implosion of FTX and the massive fall from grace of its founder Sam Bankman Fried. While the problem may be new for the crypto industry, it is the age-old problem of liquidity risk exacerbating to solvency issues.”

He added that the cryptocurrency industry will need to make conscious attempts towards governance to rebuild the trust deficit caused by the unfortunate set of events.

On the outlook for 2023, Iyer said, “Cryptos will experience a downfall for some more time, as the systemic issues in the crypto world are not addressed fully and may experience an upward trend post 6-8 months of 2023.”

FTX, which is among the top-five crypto exchanges in the world, has faced a liquidity crisis and its CEO Sam Bankman-Fried (also known as SBF) earlier told investors that the company was facing a shortfall of up to $8 billion from withdrawal requests and needs emergency funding. FTX and its sister trading house Alameda Research went bankrupt last month, dissolving a virtual trading business that at one point had been valued by the market at $32 billion. It shook the crypto world and pulled down their prices severely.

On the taxation front, Archit Gupta, founder and CEO of Clear, said, “We can expect more clarity around taxation of gains on sale of cryptocurrencies, more refinement of laws going forward which will help bring lot more clarity in this space.”

In the Budget 2022, Finance Minister Nirmala Sitharaman introduced Section 115BBH, which levies a 30 per cent tax (plus applicable surcharge and 4 per cent cess) on profits made by trading cryptocurrencies on or after April 1, 2022. This does not factor in loss to offset the tax liability.

Though private cryptocurrencies have seen a decline this year, experts said India has the potential to grow into a blockchain hub outside of the US market.

Archit Gupta said, “India has the potential to grow into a blockchain hub outside of the US market. There is a lot of interest and activity around Web3 development, this will lead to more evolution in this space and use cases of blockchain tech will grow.”

RBI Governor Shaktikanta Das on Wednesday said the biggest concern with the private cryptocurrencies like Bitcoin and Ethereum is that they do not have any underlying value, and if they are allowed to grow, the next financial crisis will come from them. He said these assets should be prohibited.

Das has in the past also come down heavily upon cryptocurrencies. He earlier also said these digital assets can create a lot of financial instability in terms of the ability of the central bank to determine monetary policy.

Read all the Latest Business News here


Original Source


CryptoCurrencyUSDChange 1hChange 24hChange 7d
? --- 0.00 % 0.00 %