Crypto collapse: it’s looking like a long, cold, contagious winter

Crypto collapse: it’s looking like a long, cold, contagious winter

Illustration by Alex Castro / The Verge

FTX is just the latest company facing an uncertain future as cryptocurrency values drop, revealing flaws in risky financial strategies that fueled the recent crypto and NFT boom.

On January 1st of 2022, one Bitcoin would cost you about $46,000. By November 8th, that same coin went for about $18,500. And that’s when the year’s most dramatic crypto story was just starting: the collapse of the FTX exchange, which brought yet another round of existential threats to the crypto industry as a whole.

On December 12th, FTX co-founder Sam Bankman-Fried was arrested in the Bahamas and will face criminal charges in the United States.

This year has looked like death by a thousand scandals for crypto. There was the Luna / Terra crash, which wiped out billions in value practically overnight. There was Axie Infinity, the once-hot NFT game that lost $625 million in a hack and has struggled to recover. Celsius collapsed. Three Arrows Capital collapsed. Remember when NFTs were cool and people thought their JPGs were worth millions?

All this happened, of course, as the overall economy began to crash back down to earth after a pandemic-created spike in stock prices — which also dampened society’s overall tolerance for chaotic, nonsensical gambling on internet money. As the economy began to even out and our collective risk tolerance went down, crypto went for many investors from a fun plaything to a dangerous bet.

Crypto has crashed before, and as ever, the HODLers are saying there’s upside left to come. But right now, the future for cryptocurrencies of all kinds looks pretty bleak.

Here’s all our coverage from the ongoing crypto winter: