Year-old crypto forecasts from industry bulls didn’t fare well in 2022, but a few sceptical voices can find solace in a healthy dose of payback.
These critics have their day in the sun, from predicting fraud to predicting insolvency.
Kevin Zhou, founder of crypto hedge fund Galois Capital and a long-time sceptic of Terraform Labs’ co-founder Do Kwon, was among those ahead of the curve on the Terra ecosystem.
Terra poses a “systemic risk” to the cryptocurrency industry, according to Zhou, who began tweeting about his concerns in March.
sentiment has everything to do with who got allocation and who didn’t and absolutely nothing to do with literally anything else
— Udi Wertheimer (@udiWertheimer) March 28, 2022
The UST algorithmic stablecoin, which had relied on an arbitrage mechanism between its sister token LUNA to keep its peg, crashed spectacularly, dragging the rest of the industry down.
It is estimated that more than $40 billion in market value was lost directly.
The rest of the crypto asset market followed suit, with bellwether bitcoin falling 49% from $34,000 on May 9 to a low of $17,500 on June 18 — bitcoin’s lowest point in one and a half years at the time.
Traditional corporations that had begun to build exposure to digital assets, specifically bitcoin, on their balance sheets over the previous two years also suffered significant paper losses.
MicroStrategy, the largest publicly traded company with bitcoin exposure, has repeatedly purchased the cryptocurrency during several market peaks this year.
MicroStrategy now owns approximately 132,500 BTC ($2.2 billion), which it purchased for roughly $4 billion at an average price of $30,397. This equates to about $1.8 billion in unrealized losses.
Earlier this year, critics such as OANDA analyst Edward Moya began to pile on against MicroStrategy’s portfolio management, calling it a “reckless” move to reach the bottom — a “gamble” by a firm meant to be more cautious.
From hero to zero
Following JPMorgan’s intervention in the US Panic of 1893, former FTX CEO Sam Bankman-Fried began offering takeover deals mid-year in what was an echo of the past. Conflicting companies like BlockFi and Voyager received rescue offers from FTX in June and July, which turned out to be an ironic twist of fate after the stock market collapsed half a year later. The stock’s ability to fund your shopping spree. Given the growth of FTX and its extraordinary rise over the past two years, some skeptics had long argued against the exchange’s fundamental business practices. Critics such as Marty Bent, founder of media company TFTC, began to express concerns about Bankman-Fried’s inability to communicate the underlying technology of cryptocurrencies, calling him a “clumsy idiot“.
Veteran Wall Street short Marc Cohodes has also long questioned the rise of FTX and Bankman-Fried, raising essential questions about the child prodigy’s origins as a Bitcoin arbiter. “There was never anything specific about him that I could articulate that made me think, ‘Oh, that makes sense,’ Cohodes said.
Over the past month, people have reached out with some great stuff on @sbf_ftx and FTX.. Its just a question of when this Charrade blows up not if.. I suggest SBF come clean and come clean fast.
— Marc Cohodes (@AlderLaneEggs) October 16, 2022
A White take on the Gray Lady
When the New York Times published a Kevin Roose “guide” to cryptocurrencies in March, a group of skeptics led by Molly White published a detailed rebuttal in the form of annotations online. He argued that the cryptocurrency market is in a speculative tech bubble phase and that Matt Damon and Larry David have recently appeared in cryptocurrency exchange advertising campaigns is a clear sign of this. Ignore, like NASCAR driver Let’s Go Brandon’s politically charged coin that ultimately resulted in Republican Congressman Madison Cawthorn being fined $14,000 when he left office. Terra’s separation was well deserved.
Crypto policy symposium
Stephen Diehl is the squeaky wheel of crypto skepticism, tweeting around 2,800 times yearly. Even a broken clock is sometimes correct, as the saying goes.
Diehl was a co-organizer of the Crypto Policy Symposium, which took place in London and online in September. The panels received very little attention, with a top-viewed video of about 1,800 views, but the attempt to organize an anti-crypto conference is noteworthy.
And, as the year 2022 ends, industry participants have been reminded that, while there is a desire to do financial good, it only takes a few bad apples to pollute the barrel.