Note that this has indeed been a challenging year for digital assets, including a record year. In particular, June 2022 was remembered for a 37 per cent drop in the value of BTC. This has not happened since at least 2013, which means that the current bearish trend can already be considered a test.


Changes in Bitcoin value by month

The closest to this level among the data available was November 2018, which is considered the bottom of the previous collapse phase. At that time, BTC collapsed by 36 per cent.

Worst period for cryptocurrencies 2018

At the end of 2022, Bitcoin’s value is down almost 70 per cent – the worst result for a cryptocurrency since 2018. To estimate the yield of the major cryptocurrency by month, see the results of the table below.

Bitcoin’s yield by month

According to Cointelegraph sources, there are two main reasons for BTC’s fall – problems in the global economy and a vicious cycle of bankruptcies within the cryptocurrency industry itself. The first is due to a prolonged period of record dollar issuance at the dawn of the COVID-19 pandemic. That is, because of the rapid increase in the money supply, the rise in inflation was only a matter of time.

In order to contain this increase, the US Federal Reserve raised its benchmark lending rate throughout 2022 at a record pace. Higher interest rates make it more unprofitable to borrow new capital, which caused the stock market to plummet. As it turned out, during such market conditions, investors tend to save their money first, so Bitcoin as a high-risk investment has lost its popularity.

The second reason for BTC’s collapse was the bankruptcy of numerous cryptocurrency companies and platforms. There is a vicious circle here: the decline in Bitcoin’s value left many firms vulnerable to the crisis in terms of their finances. In addition, the collapse of the Terra crypto project played a role, leading to billions of dollars in investor losses, the bankruptcy of crypto fund Three Arrows Capital, and other problems.

The exit of major industry organisations has only fuelled the panic of cryptocurrency holders. They continued to get rid of their bitcoins, causing the value of BTC to continue to fall, leading to more and more bankruptcies. One of the biggest disappointments of the year was the collapse of major exchange FTX, which undermined the image of the industry in the eyes of large institutional, i.e. professional wealth investors.

It is important to note that the collapse of BTC was not the main reason for the collapse of FTX. First of all, the situation was the fault of the platform's former head Sam Bankman-Fried, who used the exchange's users' money for his own needs and the needs of his colleagues from the trading company Alameda Research. Former Alameda executive Caroline Allison has already confirmed the information in the lawsuit.

Tech giants are also falling

The main US stock index, the S&P 500, has fallen almost 20 per cent since the start of the year to 3,813 points. This is the biggest fall in a year for the index since the economic crisis of 2008. The bearish trend was even worse for the Nasdaq Composite technology index, which has fallen 35 per cent since the start of the year.

Among the biggest losers of the year among large companies are Amazon, whose shares are down about 50 per cent since the start of the year, and Tesla and Meta, whose shares are down 72.75 and 65 per cent respectively. As can be seen, technology stocks and Bitcoin have shown almost identical returns in 2022, although in some cases BTC has proved to be a less attractive investment.

Bitcoin price versus popular technology stocks

The fall in the US stock market is linked to the aforementioned increase in the US Federal Reserve’s lending rate. Against this trend, the dollar has become a safe haven for investors’ capital – the DXY Index has risen by more than 8.5 per cent since the start of the year.

Development of the DXY index

To recap, DXY is an index that shows the ratio of the US dollar to a basket of six other major currencies - the euro, yen, pound sterling, Canadian dollar, Swedish krona and Swiss franc.

What is happening to the price of gold?

Since the beginning of this year, the price of an ounce of gold has risen by just 0.14 per cent. It is now hovering around $1,800.

Price of gold per ounce

On the one hand, investing in gold this year could preserve an investor’s capital. On the other hand: the precious metal was not such a good investment when inflation is taken into account. Bonds in the USA, for example, could bring in more money.

Also, it should not be forgotten that gold peaked this year at $2,070 in the spring. Since then, the value of an ounce of the precious metal has fallen by more than 20 per cent.

It’s not all bad globally

For long-term investors, whose planning horizon is measured in years, investing in Bitcoin is still profitable. Still, since March 2020, when the price of BTC fell to nearly $4,000, the cryptocurrency has risen 332 per cent by today.

Bitcoin exchange rate from 2020

It was in March of that year that active dollar issuance began, and this process provided enough “fuel” for the bullrun of the crypto market. Most interestingly, the US stock market reacted weakly to the printing of the currency. For example, the Nasdaq Composite index rose by 143 per cent after it bottomed at 6,631 points in March 2020. Investors who would have invested in Nasdaq shares at the time of the dollar printing would therefore have made a maximum 56 per cent profit by today.

Nasdaq Composite exchange rate from 2020


We think 2022 will indeed be a year to remember - and especially for those cryptocurrency users who encountered the first bearish trend. After all, we have seen many major hacks, bankruptcies and just plain failures of blockchain projects in recent months. Accordingly, such conditions could well be characterised as some of the worst in the history of digital assets.