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Top 4 Crypto Stories to Watch Before the New Year
Today marks the start of the last week 2022, a tumultuous, often challenging year for the crypto industry. There’s always something happening in the crypto space, even in this lull before the New Year. While we plan to look back on the biggest events and trends in the industry in 2022, and what it could bode for 2023, The Block has been kind enough to round up the top four stories to look at this coming week.
1) Sam Bankman-Fried, the disgraced former CEO of major crypto exchange FTX, is scheduled to face a legal hearing in New York on Jan. 3, following an array of fraud charges filed against him. Bankman-Fried was arrested in the Bahamas on Dec. 12 and after consenting to extradition, he arrived in the United States last week and was subsequently freed on bail.
The court proceedings have major implications not only for Bankman-Fried, but for the entire crypto industry.
2) Weather-related issues may continue to impact bitcoin miners in coming days — something that all cryptocurrency enthusiasts should keep an eye on as we move into the New Year. The past week saw a major winter storm sweep across the United States, bringing bitter temperatures and power outages to many parts of the country.
3) The recent collapse of FTX, one of the biggest cryptocurrency exchanges, left many investors feeling uneasy about the safety of their funds. In response, many major exchanges attempted to demonstrate proof of reserves in order to reassure customers that their money was safe.
Even Binance, the world's biggest crypto exchange, has seen recent outflows and fought to restore confidence, with the company's leader promising to "lead by example" in embracing transparency, according to a Reuters report.
Binance CEO Changpeng Zhao first engaged accounting firm Mazars for an agreed-upon-procedures attestation. This differs from a traditional financial audit in that it only requires the accountant to perform specific verification procedures requested by the client. Mazars' work with Binance, therefore, did not instill the same level of confidence as a full independent audit might have, particularly with regard to the exchange's liabilities. This was further compounded when Mazars removed its crypto attestations and announced that it would no longer work with crypto companies.
Without a full audit, there is no obvious way to independently verify whether crypto companies hold sufficient assets to cover their liabilities. Still, Zhao has also questioned the abilities of large accounting firms to accurately audit crypto exchanges.
4) The crypto asset market saw more than its fair share of drawdowns in 2022. As of the year's end, the largest crypto asset Bitcoin settled at about $16,900 from its all-time high of more than $69,000. Other cryptocurrencies have been struggling to stay afloat amid the market plunge and financial crises facing multiple firms operating in the space.
Even as the crypto market has been dragged down by losses this year, many enthusiasts are hopeful that 2023 will bring stability and increased liquidity to the space. Recently, there have been declines in trading volume; understandable given it is the time of year when many traders may be taking well-deserved breaks after a challenging period. Still, it is difficult to predict what will happen imminently and whether a recovery might begin in the first few weeks of the New Year.
Some analysts say that it will require some time before we see a stabilization of prices across different cryptos as well as Bitcoin itself. Still, as we enter 2023 there is some optimism among crypto enthusiasts who hope for a better performance than the "bear market" that was experienced in 2022.