Funviralpark This has been a year of crypto meltdowns marked by events such as the collapse of sister cryptocurrencies Luna and UST, or TerraUSD, and a devastating credit crunch for many companies, including hedge fund Three Arrows Capital, or 3AC. caused
3AC was forced into liquidation after the fund failed to make payments to crypto lenders Celsius Network and Voyager Digital, and Celsius and Voyager filed for Chapter 11 bankruptcy.
And then there was the whole FTX debacle, with founder Sam Bankman-Fried arrested and his crypto empire in ruins.
David Lesperance, managing partner, immigration and tax advisors at Lesperance & Associates, said:
He said the market is looking for reserves, account separation and proof of software that cannot be easily hacked, resulting in money being stolen from crypto exchanges, stablecoins, DeFi or decentralized finance.
“The tide is out and the crypto world is trying to figure out who is swimming naked and who is wearing a bathing suit,” Lesperance said. “Anyone found swimming naked will be subject to scrutiny by regulators and criminal law enforcement agencies to determine whether there has been an alleged offense.”
“Swimsuit wearers will find themselves stronger than ever as their competitors disappear,” he said.
Bitcoin (~ BTCUSD) It fell slightly to $16,628.62 on December 29, according to data firm CoinGecko. Ether, the native currency of the Ethereum blockchain, was flat at $1,202.14 while Dogecoin rose slightly to $0.071208.
‘A year full of hard lessons’
“2022 has been a year full of hard lessons for the cryptocurrency industry,” said Frank Korva, Senior Analyst of Digital Assets at Finder.
“The biggest and most chilling lesson many investors in the space have learned is the oft-quoted crypto adage: Not your key, not your coin,” he said.
“The failure of numerous centralized borrowing and lending financial platforms such as BlockFi, Celsius and Voyager, as well as the implosion of FTX, has left cryptocurrency investors learning the hard way if they do not hold their private keys. Once you put a digital asset into your hands, you technically no longer own it.”
Another big lesson that many in this space have learned is that cryptocurrencies and leverage do not mix.
“Crypto assets are highly volatile and when traded with leverage they are really playing with fire.” Not only has it gone bankrupt, but many retail investors have also suffered losses as more crypto derivatives products hit the market this year.”
Looking ahead to 2023, Corva said he believes the crypto industry must focus on product market fit.
“Regulators are resisting a little bit to curb what has proven to be an industry incapable of governing itself,” he said. We need to ship products with real use cases to better illustrate the value of
“Having a lot of developer activity on the blockchain alone is not enough reason for people to invest in cryptocurrencies and tokens in the long term. We hope to consider real-world applications, and we hope that the UX and UI of decentralized apps (dApps) will continue to improve.”
Institutional investors at a crossroads
In the post-FTX era, institutional investors, especially the largest sovereign wealth funds and pension funds, are at a crossroads regarding Web3 and cryptocurrency investing in 2023, says Winston Ma, adjunct professor at New York University School of Law. said.
“As a result of FTX’s bankruptcy, Singaporean government-backed Temasek has announced that it has fully written off its $275 million investment in cryptocurrency exchanges, respectively.
In his announcement, Ma said Temasek said there was a “misunderstanding” that FTX exposure was an “investment in cryptocurrencies.”
Instead, Temasek continues to recognize the potential of blockchain applications and decentralized technology to “transform the sector and create a more connected world,” and that this kind of diverging approach is likely among institutional investors. will be seen
Ma, author of Blockchain and Web3: Building the Cryptocurrency, Privacy, and Security Foundation for the Metaverse, said: “Instead of pure financial applications, so-called ‘hard technology’ innovations will be favored.”
“They tend to be technical in nature, require a high degree of expertise, and take time to build and implement. It’s a good match for the capital,” he added.
“Therefore, in 2023, institutional investors such as SWFs and pensions may be more focused on investing in Web3 technology than token-related projects, as VC funds have been doing in the past. .”
