In 2022, the summer weeks of July saw cryptocurrency prices plummet drastically. That period marked the end of the bull run that began in late 2020. For many, the drop was catastrophic but others pointed out that the bottom is yet to be found. Early November brought about the same moment when the instability in particular cryptocurrency exchanges once again devastated the cryptocurrency space, resulting in a new and strong crash. That moment saw the cryptocurrency prices plummet including the price of the BTC token.
It sank to its lowest point in over two years, but no other digital currency fared any better in what ended up as a very black week for crypto. The coming days did not see any major improvement in the overall sentiment that even worse times are coming for all who are holding digital currencies. That covers not only the fact that the crypto winter is now in full swing, but also that there is no clear idea what could turn the fortunes of the digital currencies or their owners. This question expands to the whole global economy, which is standing on the edge of a very deep and very murky patch of water. Sailing through it, however, it might take place, will not be either easy or fast.
One of the linchpins for the recent crash of crypto prices was the folding of the FTX digital currency exchange. The prices were in the slump even before that story began unfolding but the addition of the same developing news horror show made it all a lot worse. As the market cap began disappearing, the news coming from the exchange and its founder began to be even more unclear and worrying than a simple crash. At one point, Binance and its CEO floated the idea of supporting the exchange, but in less than a day came out with the decision to drop the potential deal and any negotiations.
The debacle continued with many users unable to access their funds and with fear and panic taking hold among the FTX account holders. To top all of that, the exchange finally conceded that some 600 million USD in digital assets are now unclearly located on the blockchains of these tokens. Furthermore, they stated that users should avoid the website of the exchange and delete their accounts on mobile apps. The story continues to unfold with many unanswered elements, but the bottom line remains the same – the pain from the same breakdown, like the crypto crash itself, is only starting up.
The FTX crash took place as the rest of the global economy and the state of geopolitical security is also in a very bad state. In the US, the midterm elections allowed the Democrats to survive in the Senate, which is widely seen as a rejection of Donald Trump as the potential leader of the GOP for 2024. At the same time, Joe Biden gave the strongest signals yet that he plans to run for reelection, which is also something that many deemed impossible two years ago, especially on the account of his age and the very long period career in the highest echelons of the US government. But, the stock market accepted these with some level of positivity and hopefulness, at least for the short while.
Other places around the globe are still very volatile even if the US development can be counted as a positive and stabilizing factor. In Ukraine, the Russian army evacuated Herson and the Ukrainian troops poured back in, signaling their biggest territorial win since the beginning of the war more than nine months ago. But, once more, the positives are simply not there as the war continues unabated and the Russian Federation seems as committed to it as it always was. No Western pundit or expert can provide a clear and continuous sequence of events that would simply end up in a Ukrainian war win that will turn the global economy around.
The biggest element that is pushing the crypto prices down is neither the FTX crash nor the global instability – it is the fallout of that instability, which is the looming and ever-closer recession. After a long and hard pandemic, which is still unfolding in places like China when it comes to economic repercussions, the present situation with the global trade and logistics chains of supply is as bad as it was in 2008 as the recession back then began to unravel. Governments have been printing money during the same pandemic and now the bill for the same free cash is coming to roost. The same governments are now scrambling to stabilize prices and the costs of living but that will be on the account of growth and jobs.
No governments in the world know how to bridge these two concepts for the prosperity of the people and thus the value of everything is going down, from esports competitions to global digital currencies. The recession at the same time has not even truly begun but when it does the world can say that it has truly been waiting for it for some time. The price of things like the BTC token will also be just as impacted by that process as anything else, especially because all nothing of crypto being a hedge for inflation or traditional market tribulation is now all but gone.
The crypto crash has most likely only begun its next phase. Some might believe that a rebound is close by but the rent reading of the tea leaves shows that as nearly impossible. The only thing that can truly reverse the fortunes of not only the digital currency space but the broader economy of the world is some new form of value. Presently, that appears to be a form of green revolution where economies would pivot to combating the changes of global climate disruptions. That will take time and effort, but even the crypto crash of November 2022 shows that something has to change.