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 peak ever: €54,000 ($66,000). Today, around €19,000, Bitcoin is struggling to rise again following the ups and downs of the crypto sector. It’s time for a retrospective!

Summary

  • Bitcoin Cycles
  • Bitcoin: the crypto sector undermined
    • The insane fall of the crypto terra Luna
    • The collapse of giants like 3AC and Celsius
    • Massive sales of certain giants
    • Crypto platforms have massively laid off
    • 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 an emerging sector (as evidenced by the arrival of web industries in the 1990s to 2000s). Unlike publicly traded stocks, Bitcoin and cryptos are unregulated. Therefore, it is not surprising to see these currencies increase and lose value in record times.

Although this market seems uncertain, it is governed by cycles of ups and downs – moves that are closely correlated to the health of stocks in the traditional stock market. In the sector, there are two distinguishable cycles:

  • Bear market -> Down cycle
  • Bull market -> Up cycle

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

In total, since its creation, bitcoin has generally experienced four bull runs and three bear markets.

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

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

Bitcoin: the crypto sector undermined

Bearing the full brunt of the fall in the value of shares, Bitcoin has also suffered from the situation in the crypto market. Particularly stressful events had strong repercussions.

The insane fall of the crypto terra Luna

Last May, the LUNA cryptocurrency began a monumental fall, scaring 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 stablecoin, UST, down with it. In short, investors withdrew $40 billion from the protocol, which had the effect of derailing 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 rose from around €39,000 to €29,000.

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

The collapse of giants like 3AC and Celsius

Some companies in the crypto industry have racked up immense losses due to the downtrend in Bitcoin and cryptocurrencies. Very exposed to Terra, the investment fund 3AC with Voyager digital or the crypto loan company Celsius suffered the snowball effect.

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

Massive sales of certain giants

These not very reassuring announcements also had the effect of pushing major market players to give up because of the decline.

We think in particular of the case of Elon Musk and his company Tesla. On July 20, the crypto sphere learned the billionaire had parted with 75% of his bitcoin holdings, or approximately 918 million euros. This announcement was not reassuring for investors since the automaker was one of the companies holding the most Bitcoin in capital.

Crypto platforms have massively laid off

When they did not collapse on themselves, some actors preferred to make their arrangements to face difficult times.

With the increase in value of cryptos, some companies in the 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 one year. While Bitcoin had fallen to €20,000 last June, to rebalance the balance, it announced the layoff of 20% of its workforce to cope with the market drop.

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

These massive layoffs have also not spared players linked to the crypto market. Indeed, Opensea, the first NFT platform has also made arrangements.

Last July, Opensea announced that it was parting with 20% of its employees to resist the decline in the value of tokens – closely correlated to the prices of cryptos, since 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 the metaverse 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, for the moment, the context seems unfavorable for Bitcoin to start all its sectors up again. With a possible ban on Bitcoin mining and anxiety-provoking events for the markets (war, energy shortage etc.), the cryptocurrency is waiting for the green light to start again – but it does not seem to be coming…

About Bitcoin

What is Bitcoin?

Bitcoin is first and foremost a payments network allowing its users to exchange peer-to-peer currency. 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 initially created to be an alternative system to banks.

What is Blockchain?

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

The mathematician Jean-Paul Delahaye explains that we can visualize this large archive as “a very large notebook, which everyone can read freely and free of charge, on which everyone can write, but which is impossible to erase 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 since it is the consensus of its users that allows the change of its protocol. Developers can make changes only 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 blockchain. Concretely, each miner puts their machines (graphics card, ASICs) in competition to solve an equation in order to validate the veracity of the block. Thus, the Bitcoin network makes sure to issue secure transactions scrutinized by several binary intermediaries.

How to get Bitcoin?

Mining

Anyone using their hardware computing power (graphics card, 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 (euros, dollars, etc.).

Where to store bitcoin?

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

Hot Wallet

Hot wallets are Internet-connected private key storage solutions. In the form of software, these portfolios can be applications, extensions or even websites.

Cold Wallet

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

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


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