There’s no denying that Bitcoin faced a considerable downturn throughout 2022, dropping from an all-time high of nearly $69,000 in November 2021 to as low as $16,000 in November 2022. However, 2023 has seen consistent growth despite a wide range of challenges and controversies. Even with these issues, the investor outlook remains strong for Bitcoin and many other cryptocurrencies.
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Uncertainty in US Crypto Regulations
Like many other countries, the US is still in the process of working out its cryptocurrency regulations. While opinion varies throughout the government, the current trend is toward increasing regulation and enforcement. While this might open the door to more widespread adoption, many cryptocurrency investors are concerned about the impact that new rules will have.
The uncertainty surrounding regulation has many major cryptocurrency exchanges worried. In April 2023, cryptocurrency exchange Coinbase filed a potation to the SEC to develop concrete rules surrounding crypto. In May 2023, another exchange, Bittrex, filed for bankruptcy for their US branch of operations, citing the inability to continue operations under current regulations.
Some Countries Still Hostile Toward Crypto
In general, many countries throughout Europe and the world follow roughly the same course as the US. There is uncertainty but tentative acceptance of cryptocurrencies in general. However, there are some countries where this is far from being the case.
Once the world’s largest crypto mining hub, China has now outlawed cryptocurrencies entirely. As of 2021, all crypto transactions are illegal. The news struck a major blow to crypto markets around the world. However, despite those regulations, China has made a comeback as the 2nd largest Bitcoin mining hub, with many operations using proxy servers to mask their identity and evade the law.
India has seen a rise in Bitcoin mining and use over the past few years, but new regulations may change that. These new regulations came into effect in March 2023 and imposed exorbitant taxes on crypto transactions and harsh fines for individuals and institutions that do not report transactions. Many experts believe this will stifle any growth in the region, pushing crypto adoption backward.
Major Failures Increase Concern
November 2022 saw the collapse of FTX, the second-largest crypto exchange at the time. They filed for bankruptcy, and the CEO, Sam Bankman-Fried, fled the country, later to be arrested and extradited back to the US. The following months revealed a range of decisions ranging from negligent to potentially fraudulent from the exchange’s leadership.
FTX is not the only major exchange to have collapsed. In 2014, the largest cryptocurrency exchange at the time, Mt. Gox, underwent a similar bankruptcy. 2019 saw the collapse of the largest cryptocurrency exchange in Canada, Quadriga CX. There was hope that these incidents were in the past, thanks to new regulations and stricter monitoring, but FTX showed everyone that this was not the case.
Another major disaster for crypto came in the rapid fall of Terra Luna and TerraUSD. TerraUSD was a supposed stablecoin, intended to always match the value of the US dollar. However, in March 2022, it unpegged, meaning it fell below its intended value, dropping to as little as ten cents. The Terra Luna token associated with TerraUSD lost over 99 percent of its value, wiping out approximately $60 billion.
These two major crises and a variety of smaller disruptions cast significant doubt on Bitcoin and other cryptocurrencies moving into 2023. However, actual performance has been much stronger than expected so far.
There are other cases where fraud has been documented and exposed. One such occasion has to do with a scheme named “Quantum AI” which has been debunked in this review. It seems there are many others like it.
Bitcoin Still Growing Strong
Despite all of these challenges, Bitcoin has shown incredible performance during 2023. As of July, its value has nearly doubled since the start of the year. Many investors are hopeful for a return to previous all-time highs by the end of 2023, even with so many aspects of the regulatory and institutional framework around crypto so uncertain.
