The past year has been challenging for investors, as rising inflation and the end of cheap money from central banks worldwide have led to a decrease in global stock values of around 20%. In addition, Bitcoin has experienced a decline of over 60% in value from its all-time high of $69,000 in November 2021.
The sharp downturn in the cryptocurrency market can be attributed to several factors, including the Federal Reserve’s monetary policies, rampant investments in all markets fueled by the influx of printed money, the effects of the COVID-19 pandemic on inflation, and the energy crisis in Europe caused by Russia-Ukraine war. These events have contributed to the peak in cryptocurrency prices in 2021 and destabilized global financial markets, including the cryptocurrency ecosystem.
State of the Market — Traditional Finance Market vs Cryptocurrency
The traditional finance market, like the crypto market, has seen quite the year in 2022 as the MSCI All-Country World Index of stocks has lost approximately 20% of its value, the worst performance in 14 years. Europe’s STOXX 600 saw a decline of around 12%, and China’s CSI 300 index fell 22% due to COVID-19 lockdowns.
Also, inflation rose significantly, leading to the Federal Reserve’s rise in US interest rates, the most aggressive increase since the 1990s. According to the Bloomberg billionaires index, the market wiped almost $1.4 trillion from the fortunes of the 500 wealthiest individuals. Tech stocks, including the FAANGs (Facebook, Amazon, Apple, Netflix, and Google), were hit particularly hard, with the Nasdaq Composite losing a third of its value. Tesla also saw a decline of about two-thirds in value. Indeed, the market was bloody all year round.
For the cryptocurrency market, the year 2022 started with a hopeful outlook as several companies, including FTX, Luna and Autograph, raised significant funds and major players, such as Tesla and Walmart, made moves towards adoption. However, the market quickly faced challenges, including hacks and collapses of major projects, leading to a volatile and tumultuous year.
It was a crazy rollercoaster of events, from Do Kwon to SBF, one news bumbling on another. A lot happened this year that made it hard to keep tabs, but our crypto portfolio does the job just fine.
The year 2022 brought more than we anticipated and currently stands as one of the worst years in crypto history, with over $2 Trillion lost from the market, leaving the current market valuation at $824 Billion.
The value of cryptocurrency coins like Terra, Solana, Cardano, Ether, Bitcoin, and Dogecoin all saw significant losses in the past year, with Terra experiencing the greatest loss at 100%, followed by Solana, Cardano at 80%, Ether at 67%, Bitcoin at 63%, and Dogecoin at 55%.
In retrospect, the crypto ecosystem saw a peak in prices in 2021, which was an effect of external factors, primarily lower interest rates and money printing. This contributed to the best bull run in crypto and fueled the reckless investments in the market in 2021.
Nevertheless, the blockchain market shows resilience and high energy with growing real-life adoptions globally, from payments in petrol, BTC and ETH entering Australia’s ETF landscape to BTC’s legal tender announcement in the Central African Republic.
Despite the de-pegging of UST and the 84% drop in the value of $COIN, Andreesen Horowitz was able to secure its largest-ever cryptocurrency fundraising of $4.5 billion, which is also the largest ever in crypto history.
In general, the 2022 bear market has shown a need for venture capitalists to become more selective in their investments and carry out intensive scrutiny on the founders and their teams. Also, there is a renewed focus on funding projects with the potential to create value rather than providing additional funding to projects with no use case.
The era of thinking like gamblers and chasing 100x returns is also coming to an end, as the focus is shifting towards driving the mainstream adoption of Blockchain Technology. The implementation of this will be the driver of the next bull cycle rather than hype and speculation.
A new year: The way forward
The global financial market is struggling, and each industry is reevaluating its strategies in order to change the current narrative.
Goldman Sachs has released its macroeconomic outlook for 2023, stating that global growth slowed significantly in 2022 due to various factors, including fiscal and monetary tightening, China’s ongoing Covid restrictions, a property slump, and the Russia-Ukraine war. The firm predicts that global growth will continue at a below-trend pace of 1.8% in 2023, with a mild recession in Europe, a bumpy reopening in China, and pockets of resilience in the US and some emerging markets.
In the US, Goldman Sachs expects growth to remain at a below-potential pace of around 1% but believes the country will narrowly avoid a recession. Europe is expected to experience a mild downturn due to increased energy costs. At the same time, China is predicted to grow slowly in the first half of the year before accelerating in the second half. Also, Central and Eastern Europe and Latin America are expected to experience some growth, with challenges in CEE due to its commodity exposure, high inflation, and ongoing monetary tightening.
As the crypto market looks to bounce back from its recent struggles, it is clear that external factors like lower interest rates and increased money printing can no longer be relied upon to drive its success. Instead, the focus must shift to internal drivers, such as true innovation and viable projects with real-world applications that can attract and retain users.
One project poised to make a significant impact in this area is Match. Not only are we solving the problem of user influx in the crypto space, but we are promoting interoperability and decentralized identification (DID) use through our revolutionary infrastructure.
For example, during the year, we saw Elon Musk buy Twitter, and on December 18th, he made a controversial change in the platform’s policy. The policy, later reversed, permitted banning accounts “created solely” to promote alternative social media platforms. The policy not only generated significant outrage and opposition, but it also highlighted the need for a decentralized social platform that prioritizes user autonomy and freedom. One of our primary goals is to address issues like this by promoting decentralized, Web3-based social networks. We aim to be a hub for web3 social traffic while helping users maintain privacy through DIDs and ZKP.
Match is also revolutionizing how dapps are built, making it easy for traditional Web2 platforms to transition to Web3. We believe in collaboration and actively promote it. Instead of competing for users, we create a system where developers can work together to create practical, mass-adoption-worthy dapps because we serve as an aggregated pool of user traffic with inherent interoperability. This allows users to easily move between different blockchain dapps without being stuck on the chain of the first dapp they used.
Overall, Match is playing a crucial role in revitalizing the cryptocurrency market and fostering innovation in the field. Our innovative approach to building and scaling decentralized apps will have a significant influence in the near future.
For more information on the Match chain, what we do and how to connect with us, visit:
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