News hardware A year ago, Bitcoin hit € 54,000 … A look at this colorful year for cryptocurrencies
On October 22, 2021, the price of Bitcoin reached its all-time high: € 54,000 ($ 66,000). Today, around € 19,000, Bitcoin struggles to recover after the ups and downs of the cryptocurrency sector. It’s time for a retrospective!
- Bitcoin cycles
- Bitcoin: the mined cryptocurrency sector
- The mad fall of the crypto earth Moon
- The collapse of giants like 3AC and Celsius
- Massive sales of some giants
- Crypto platforms have been massively licensed
- NFTs and the Metaverse pay the price
First of all, you are aware that the cryptocurrency market is ultra-volatile, which generally characterizes an emerging sector (as demonstrated by the arrival of the web industries in the 1990s and 2000s). Unlike publicly traded stocks, Bitcoin and cryptocurrencies are not regulated. Therefore, it is not surprising to see these currencies rise and fall in value in record time.
While this market seems uncertain, it is governed by cycles of ups and downs, movements closely related to the health of stocks in the traditional stock market. In the sector there are two cycles:
- Bearish market -> Bearish cycle
- Bull market -> Bullish cycle
Specifically, in the land of investments, the buyers are symbolized by the bull, while the sellers are the bears. The image of the bear stocking up for the winter sums up the stages of the loss of value quite well. As for the bull (bull), this indicates the determination to “run” upward.
In total, since its creation, bitcoin has generally experienced four bull runs and three bear markets.
After experiencing a bull market following the collapse of the covid in 2020, taking Bitcoin to € 54,000, many agree that Bitcoin and other cryptocurrencies have started their bear market since November.
A lot has happened since this event, in just 1 year …
Bitcoin: the mined cryptocurrency sector
Bearing all the brunt of the decline in share value, Bitcoin has also suffered from the situation in the cryptocurrency market. Particularly stressful events had strong repercussions.
The mad fall of the crypto earth Moon
Last May, the LUNA cryptocurrency began a monumental fall, scaring the entire cryptocurrency market. The cryptocurrency founded by Do Kwon went from € 80 to € 0, leaving many investors on the cutting board. This fall is one of the biggest cryptocurrency crashes to date.
As it fell, LUNA dragged its stablecoin, UST, downward. In short, the investors withdrew 40 billion dollars from the protocol, which had the effect of derailing the algorithmic system and thus creating a downward spiral in the price of the UST stablecoin.
This event created a general panic, causing the price of the two cryptocurrencies to be worth less than a cent. After this incident, Bitcoin paid the price as its price went from around € 39,000 to € 29,000.
But it’s not just the courses that pay the price….
The collapse of giants like 3AC and Celsius
Some companies in the cryptocurrency industry have accumulated huge losses due to the downward trend of Bitcoin and cryptocurrencies. Highly exposed to Terra, the 3AC investment fund with Voyager digital or crypto loan company Celsius has been snowballed.
For example, 3AC lost around € 191 million during the infamous collapse of the cryptocurrency Luna and its UST algorithmic stablecoin. As a result, the company was suspended for unpaid debts for a Voyager Digital, amounting to € 617 million.
Massive sales of some giants
These uneasy announcements also had the effect of pushing major market players to give up due to the decline.
Let us think in particular of the case of Elon Musk and his company Tesla. On July 20, the crypto sphere learned that the billionaire had parted ways with 75% of his bitcoin holdings, which is around € 918 million. This announcement was not reassuring to investors as the automaker was one of the companies that held the most Bitcoin in equity.
Crypto platforms have been massively licensed
When they weren’t collapsing in on themselves, some actors preferred to make their own arrangements to cope with difficult times.
With the rise in value of cryptocurrencies, some companies in the sector have grown very rapidly… This is why many of them found themselves in a delicate situation when prices started to fall.
This is the case with BlockFi, a cryptocurrency lending and lending platform that has grown from 150 employees to around 850 in one year. While Bitcoin had dropped to 20,000 euros last June, to rebalance the balance, it announced the layoff of 20% of its workforce to cope with the market decline.
The Crypto.com platform, which you will surely have seen on the UFC organization shirt, had also announced the firing of some of its employees. The platform is trying to limit the breakdown and says the company has reduced its workforce by 5%, around 260 people. In the process, Coinbase, the largest platform for buying and selling cryptocurrencies, plans to lay off 1,100 employees, or roughly 18% of its total workforce.
These massive layoffs haven’t spared players tied to the cryptocurrency market either. In fact, Opensea, the first NFT platform, has also made agreements.
Last July, Opensea announced that it would be separating from 20% of its employees to resist the drop in the value of the tokens, which is closely related to the prices of cryptocurrencies, as it is necessary to have them in order to buy them.
NFTs and the Metaverse pay the price
The web3 sectors have largely benefited from the rise of cryptocurrencies. In this sense, non-fungible tokens (NFTs) and the metaverse have suffered from the decline of Bitcoin and other cryptocurrencies. It is clear that these areas have largely lost interest since Bitcoin’s value fell.
Currently around € 19,000, for the moment, the context seems unfavorable for the relaunch of all its sectors by Bitcoin. With a possible ban on Bitcoin mining and events that cause anxiety for the markets (war, energy shortage, etc.), the cryptocurrency is waiting for the green light to start over, but it doesn’t seem to be coming …
What is Bitcoin?
Bitcoin is primarily a payments network that allows its users to exchange peer-to-peer currency. It is based on a digital currency called Bitcoin (BTC).
Thanks to blockchain technology *, Bitcoin offers the possibility of making decentralized payments, i.e. without third parties or trusted authorities. With this in mind, Bitcoin was initially created to be an alternative system to banks.
What is the Blockchain?
The blockchain (literally chain of blocks) is in a sense the digitization of trust. Concretely, its code allows web users to exchange peer-to-peer value with a decentralized validation system. All actions performed on a blockchain are anonymous but transparent.
Mathematician Jean-Paul Delahaye explains that we can visualize this large archive as “a very large notebook, which everyone can read freely and for free, on which everyone can write, but which is impossible to erase and indestructible”.
Who manages Bitcoin?
If the name behind Bitcoin is known to everyone, Satoshi Nakamoto, no one really knows the identity of the creator. Either way, it doesn’t matter as Satoshi has little power over his code.
In fact, Bitcoin is decentralized, so it doesn’t depend on any entity. Its network does not belong to anyone since it is the consent of its users that allows the change of its 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 managed its own blockchain. Specifically, each miner competes their machines (graphics card, ASIC) to solve an equation in order to validate the veracity of the block. Therefore, the Bitcoin network makes sure to issue secure transactions controlled by several binary brokers.
How to get Bitcoin?
Anyone using their hardware computing power (graphics card, ASIC) 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 currency, among others (euros, dollars, etc.).
Where to store bitcoin?
Like cash, Bitcoins can be stored in virtual wallets, generally called wallets. There are several types of wallets:
Hot wallets are Internet-connected private key storage solutions. In the form of software, these wallets can be applications, extensions, or even websites.
Cold wallets are a safer alternative to cryptocurrencies. In fact, 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 take on the appearance of a USB stick or even paper.