Over the last couple of days, broken banks put immense pressure on the crypto industry. Several banks came forward to reveal their exposure to the crash. The effects of federal action on the security of reserve assets and the weekend’s events on the outlook for interest rates both benefitted digital assets like Bitcoin [BTC]. The asset surged to a high of $26,514.72.
In order to avoid further harming the financial system, a number of institutions, notably Goldman Sachs, anticipated that the Fed will proceed more cautiously with any future efforts to tighten monetary policy. This also added to the market’s growth. Several have even compared the current scenario to the 2008 financial slump during which Bitcoin was born.
Similar to the ongoing banking crisis, an array of events have occurred over the last two years that have influenced the overall crypto market. All of these events point toward how cryptocurrencies are developing under mass volatility as well as financial restructuring.
The infamous downfall of one of the most popular exchanges, FTX sent shockwaves across the globe. Sam Bankman-Fried’s exchange nearly uprooted the entire industry. It started with SBF trying to emerge as crypto’s very own “knight in shining armor” to protect a few other exchanges from approaching disasters brought on by rising interest rates.
Sadly, a chain reaction was ticked off which caused the collapse of several other firms right after. Currently, SBF sits under house arrest while former users await the release of funds.
Ethereum – Merge
The mainnet and beacon chains successfully merged at 14:43 on September 15th, bringing about the end of Ethereum Proof of Work [PoW] and the full transition to Proof of Stake [PoS] after an eight-year wait. “The Merge” represents a significant turning point for the crypto ecosystem. According to their plans, which were released on Nov. 5, Ethereum’s vision still has more goals to reach. Nevertheless, it transformed the second-largest crypto in the space.
3AC goes bankrupt
Due to the market decline in early 2022, 3AC suffered large losses in its crypto holdings. This sparked a rush of demands for redemption from investors looking to get their money back. In order to satisfy these demands, the company was then compelled to sell its assets at a loss, which increased the losses. 3AC stated in March 2022, that it will close its flagship fund and refund all investor funds. The firm’s failure was a big deal for the crypto sector.
The firm had invested $200 million in LUNA. 3AC has recovered certain assets that belonged to creditors, including $35 million and a variety of cryptocurrency tokens.
TerraUSD loses its peg
When UST failed, $84 million was used to leverage a $40 billion financial empire. The UST de-pegging and the market’s severe fear led to a large withdrawal, which set off the crash. It took just two days for Terra, one of the biggest public chains in the world at the time, to fail. Right then, the historical decline of crypto began. The events that followed suit were truly detrimental to the entire market.
Another notable event that occurred in 2022 was the May 2022 FOMC meeting. Right after the Fed chair Jerome Powell ruled out bigger rate hikes, Bitcoin surged to $40K. The Ukraine-Russia war caused chaos across the globe. Amidst this, Ukraine witnessed a plethora of cryptocurrency-related donations which prompted the government to legalize digital assets.
Here are the most influential crypto events of 2021
2021 was way different for the crypto industry. While the DeFi space maintained its hot streak, NFT became the talk of the town. Together, these events gave cryptocurrency momentum in 2021.
Elon Musk and his inclination toward Dogecoin
One of the main crypto events of 2021 was the sudden rise and collapse of Dogecoin. The meme coin gained popularity after Tesla CEO Elon Musk tweeted a number of times in Feb. 2021 endorsing it. Musk has subsequently proceeded to hype up the crypto.
Prior to Elon Musk’s SNL debut in May 2021, the value of Dogecoin started to rise. On May 8, the day after Musk’s appearance on Saturday Night Live, Dogecoin reached its all-time high price of 73 cents. Dogecoin’s value dropped by roughly 30% during Musk’s appearance on the program.
China Bitcoin ban
China announced a crackdown on cryptocurrency when it was ballooning in the region and fought the industry’s growth. In September, China put a complete ban on all cryptocurrency trade and mining after initially imposing a partial ban. As a result, a lot of businesses and mining pools decided to move their activities outside of the nation.
Elon Musk’s love-hate relationship with Bitcoin
After Tesla’s disclosure that it had invested $1.5 billion in Bitcoin and Musk’s declaration that Tesla will accept Bitcoin for payments in March, the price of Bitcoin exceeded the $50,000 mark in February. However, everything changed after Musk “broke up” with Bitcoin.
A few other events that molded the crypto industry were highlighted by Economist Alex Krüger.