Key TakeawaysCryptocurrency industry was valued close to $3 trillion entering 2022, now it is $800 billion There are 73% less Bitcoin millionaires after 2022 Bitcoin has pulled back 75% from its all-time high fo close to $69,000 25% of the bitcoin supply was in a loss entering the year, now it is over 50% Number of investors holding greater than 1 BTC jumped 20% as the hurdle became much more attainable
Once upon a time, the cryptocurrency market was valued at $3 trillion. To be precise, this was in November 2021, when Bitcoin traded at its all-time high of close to $69,000.
But then along came 2022. Inflation sparked as a result of the COVID money printing, war in Ukraine and supply chain issues, meaning central banks worldwide were forced to hike rates to curtail a spiralling cost-of-living crisis.
With the cheap liquidity pulled out from under markets, Bitcoin – and crypto as a whole – felt the pinch. We have seen top 10 cryptocurrencies collapse, one of the top exchanges revealed to be a house of cards and numerous other bankruptcies and scandals.
The loss has been greater than $2 trillion, with Bitcoin shedding three-quarters of its value as at the time of writing, trading at $16,800.
Looking at on-chain data from bitinfocharts.com, Bitcoin millionaires have dropped like flies. Entering 2022, there were 90,000 addresses containing over a million dollars worth of Bitcoin. Today, it is 24,000 – that amounts to a fall of 73%.
“The on-chain data sums up what is glaringly obvious from looking at a Bitcoin price chart – that the party is over and investors are no longer dreaming of retirement off their Bitcoin holdings, in the near future at least! Nearly three-quarters of Bitcoin millionaires losing that status is perhaps the best piece of data of all to summarise how ugly 2022 was for investors” said Max Coupland, Director at CoinJournal.
Percent in supply in loss doubles in 2022
Bitcoin’s returns before 2022 were astonishing. As a result, the bulk of the supply was in profit, with only 25% of the supply loss-making entering the year. By year-end, this had doubled to over 50% – another stunning statistic when considering that Bitcoin was the best-performing asset class in the world over the prior decade.
Addresses holding greater than 1 BTC
On the flipside, with Bitcoin being so cheap compared to last year, the number of addresses containing one Bitcoin or greater – “whole coiners”, as they are known – is at all-time high, even if the dollar value contained in those addresses is way down.
Entering 2022, there were over 814,000 addresses holding more than 1 BTC. By the end of the year, this number was over 978,000 – that is a rise of 20%.
As can be seen when zooming in on 2022 on the below chart, there were significant jumps when Bitcoin plunged off the back of the three major scandals of 2022 – Luna’s death spiral, Celsius’ insolvency and the revelations of fraud at FTX.
Dropping sentiment matching falling prices
Perhaps the biggest problem emerging from 2022 is related to these scandals. The reputation of crypto has taken a hammer blow, most notably with the shocking downfall of FTX and disgraced former CEO Sam Bankman-Fried.
According to a CNBC survey as of November 2022, only 8% of Americans now have a positive view of cryptocurrency.
Crypto investors have seen similar percentage declines before, of course, only for the market to bounce back. But this time, crypto is fighting against a pullback in the wider economy for the first time in its history.
Until now, it had been zero (or negative) interest rates and a warm money printer. Now, we have transitioned to a new environment, and crypto investors are feeling the pain. They will hope that 2023 can bring a return to prominence and start mending the reputation of the wounded asset class.
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Address data taken from on-chain. Price data from Yahoo Finance.
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