A year ago, Bitcoin reached €54,000… A look back at this colorful year for crypto

News hardware A year ago, Bitcoin reached €54,000… A look back at this colorful year for crypto

On October 22, 2021, the price of Bitcoin reached its highest ever peak: €54,000 ($66,000). Today, around €19,000, Bitcoin is trying to rise again after the ups and downs of the crypto sector. It’s time for a retrospective!

summary

  • Bitcoin cycles
  • Bitcoin: mining the crypto sector
    • The crazy fall of crypto terra Luna
    • The fall of giants like 3AC and Celsius
    • Mass sales of certain giants
    • Crypto platforms have been shut down en masse
    • NFTs and the Metaverse pay the price

Bitcoin cycles

First of all, you are aware that the crypto market is ultra-volatile – which generally characterizes a developing sector (as evidenced by the advent of the Internet industries in the 1990s-2000s). Unlike publicly traded stocks, Bitcoin and cryptocurrencies are unregulated. Therefore, it is not surprising that these currencies rise and fall in value in record time.

Although this market appears 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 distinct cycles:

  • Bear market -> Cycle down
  • Bull Market -> Cycle Up

Specifically, in investment land, buyers are symbolized by the bull, while sellers are the bears. The image of the bear stocking up for winter pretty well sums up the stages of value loss. As for the bull (taurus), this indicates the determination to “rush” upwards.

In total, since its inception, bitcoin has generally experienced four cycles and three bear markets.

After experiencing a huge market after the Covid crash in 2020, taking Bitcoin to €54,000 – many agree that since November Bitcoin and other cryptos have started their own bear market.

Since this event, a lot has happened, in just 1 year…

Bitcoin: mining the crypto sector

Bearing the brunt of the decline in stock value, Bitcoin has also suffered from the situation in the crypto market. Particularly stressful events had strong consequences.

The crazy fall of crypto terra Luna

Last May, the cryptocurrency LUNA began a monumental decline, spooking the entire crypto market. The cryptocurrency founded by Do Kwon went from €80 to €0, leaving many investors on the chopping block. This fall is among the biggest cryptocurrency crashes to date.

As it fell, LUNA dragged its stable currency, the UST, with it. In short, investors withdrew $40 billion from the protocol, which had the effect of breaking 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 cryptos to be worth less than a penny. After this incident, Bitcoin paid the price as its price increased from around €39,000 to €29,000.

But it’s not just the courses that have paid the price….

The fall of giants like 3AC and Celsius

Several companies in the crypto industry have accumulated huge losses due to the downtrend in Bitcoin and cryptocurrencies. Heavily exposed to Terra, investment fund 3AC with Voyager digital or crypto lending company Celsius suffered the collection effect.

As an example, 3AC lost around 191 million euros during the infamous crash of cryptocurrency Luna and its algorithmic stablecoin UST. As a result, the company was put on hold for unpaid debts destined for a Voyager Digital, in the amount of 617 million euros.

Mass sales of certain giants

These not-so-reassuring announcements also had the effect of prompting major market players to give up on the downside.

We think in particular of the case of Elon Musk and his company Tesla. On July 20, the crypto world learned that the billionaire had parted with 75% of his bitcoin holdings, or roughly €918 million. This announcement was not reassuring to investors as the automaker was one of the companies holding the most Bitcoin in equity.

Crypto platforms have been shut down en masse

When not falling over themselves, some actors preferred to make their own deals to weather the tough times.

As the value of cryptos increased, some companies in this sector grew very quickly… For this reason, many of them found themselves in a delicate situation when the prices started to fall.

This is the case of BlockFi, a cryptocurrency lending and borrowing platform that has grown from 150 employees to around 850 in a year. As Bitcoin had fallen to 20,000 euros last June, in order to rebalance the balance, he announced the layoff of 20% of the workforce to cope with the market decline.

The Crypto.com platform, which you have probably seen in the UFC organization’s jersey, had also announced the dismissal of some of its employees. The platform is trying to contain the breach and claims the company has reduced its workforce by 5%, around 260 people. In the process, Coinbase, the largest platform for buying and selling cryptocurrencies, planned to lay off 1,100 employees, or about 18% of its total workforce.

These mass vacations have also not spared the players associated with the crypto market. Indeed, Opensea, the first NFT platform has also made deals.

Last July, Opensea announced that it was laying off 20% of its employees in order to withstand the decline in the value of the tokens – closely linked to the prices of cryptos, as it is necessary to have them to buy them.

NFTs and the Metaverse pay the price

The web3 sectors have largely benefited from the rise of cryptos. In this sense, non-fungible tokens (NFTs) and metaverses have suffered from the decline of Bitcoin and other cryptos. It is clear that these areas have largely lost interest since Bitcoin fell in value.

Currently around €19,000, at the moment, the context seems unfavorable for Bitcoin to restart all its sectors. With a possible ban on Bitcoin mining and events provoking anxiety for the markets (war, power shortage, etc.), the cryptocurrency is waiting for the green light to start again – but it does not seem to come…

About Bitcoin

What is Bitcoin?

Bitcoin is first and foremost a payment network that allows its users to exchange currency peer-to-peer. 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 originally created to be an alternative system to banks.

What is Blockchain?

Blockchain (literally chain of blocks) is in a way the digitization of trust. Specifically, its code allows web users to exchange value peer-to-peer with a decentralized authentication system. All actions performed on a blockchain are anonymous but transparent.

Mathematician Jean-Paul Delahaye explains that we can imagine this great archive as “a very large notebook, which everyone can read freely and without charge, in which everyone can write, but which is impossible to hidden and indestructible”.

Who Runs 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 since Satoshi has little power over his code.

Indeed, Bitcoin is decentralized, so it does not depend on any entity. Its network does not belong to anyone as it is the consensus of its users that allows its protocol to be changed. 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 has operated its own blockchain. Specifically, each miner puts their machines (graphics cards, ASICs) in competition to solve an equation in order to prove the authenticity of the block. Thus, the Bitcoin network makes sure to issue secure transactions controlled by several binary brokers.

How to get Bitcoin?

Mining

Anyone using their hardware computing power (graphics cards, ASICs) is paid in BTC according to their involvement in the network.

Exchange platforms

In addition to mining, Bitcoin can be obtained on cryptocurrency exchange platforms against fiat currency among others (euro, dollar, etc.).

Where to store bitcoins?

Like cash, Bitcoin can be stored in virtual wallets, generally called wallets. There are several types of portfolios:

Hot wallet

Hot wallets are private key storage solutions connected to the Internet. In software form, these wallets can be apps, plugins, or even websites.

Cold Wallet

Cold wallets are a safer alternative to cryptocurrencies. Indeed, the private keys of these wallets are not stored online, so it is much more difficult for a hacker to gain access to them. These wallets usually take the appearance of a thumb drive or even paper.

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