Key Information
- The cryptocurrency sector was valued at nearly $3 trillion in 2021 and is now around $800 billion
- There are 73% fewer Bitcoin millionaires since 2022
- Bitcoin has retreated about 75% from its all-time high near $69,000
- 25% of Bitcoin supply was underwater at the start of 2022; now more than 50% is
- The number of investors holding more than 1 BTC jumped 20% as the target became far more attainable
At one time the crypto market was valued at $3 trillion. To be precise, that peak came in November 2021 when Bitcoin traded near its all-time high of roughly $69,000.
Then 2022 arrived. Inflation surged after the COVID-era money printing, the war in Ukraine and global supply-chain disruptions. Central banks around the world were forced to raise rates to try to control a rapidly worsening cost-of-living crisis.
With cheap liquidity withdrawn, Bitcoin — and crypto as a whole — took a severe hit. We witnessed collapses among the top 10 cryptocurrencies, a leading exchange crumple like a house of cards, and many bankruptcies and scandals.
The market lost more than $2 trillion in value, with Bitcoin shedding roughly three quarters of its peak value; at the time of writing it traded around $16,800.
Bitcoin Millionaires
On-chain data from bitinfocharts.com shows Bitcoin millionaires disappeared in large numbers. By 2022 there were about 90,000 addresses holding Bitcoin valued at over $1 million. Today that figure is roughly 24,000 — a 73% decline.
“On-chain data summarizes what’s starkly visible on Bitcoin’s price chart — the party is over and investors are not dreaming of exiting in large numbers from their Bitcoin holdings, at least in the near term. Nearly three quarters of Bitcoin millionaires losing their status may be the clearest indicator of how brutal 2022 was for investors,” said Max Coupland, director of CoinJournal.
Percentage of Supply in Loss Doubled in 2022
Bitcoin returns before 2022 were extraordinary. As a result, most of the supply was in profit, and only 25% of the supply was at a loss early in 2022. By year-end that share had doubled to over 50% — a striking statistic given Bitcoin’s status as the best-performing asset class of the previous decade.
Addresses Holding More Than 1 BTC
On the other hand, since Bitcoin became much cheaper compared with the prior year, the number of addresses holding one Bitcoin or more — commonly called “whole coins” — has remained elevated, even though the dollar value held by those addresses has fallen substantially.
Before 2022 there were more than 814,000 addresses holding more than 1 BTC. By the end of the year that number exceeded 978,000, an increase of about 20%.
As the chart below shows, there were noticeable spikes as Bitcoin rebounded from three major 2022 shocks — the Luna death spiral, Celsius’s insolvency and the exposure of fraud at FTX.
Falling Sentiment Mirrors Falling Prices
Alongside those scandals came perhaps the biggest problem emerging since 2022: reputational damage to the crypto industry, notably the shocking collapse of FTX and the fall from grace of its former CEO, Sam Bankman-Fried.
A November 2022 CNBC survey found only 8% of Americans now view cryptocurrencies positively.
Crypto investors have seen similar percentage drops before and the market has recovered. This time, however, crypto is fighting against a broader economic downturn for the first time in its history.
Previously, the environment featured near-zero or negative interest rates and ample money printing. We’re now in a different regime, and crypto investors are feeling the pain. Many will hope 2023 brings a return to prominence and begins to repair the reputation of this bruised asset class.
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Research Methodology
Address-level on-chain data was used. Price data was sourced from Yahoo Finance.