Cryptocurrency has always been volatile, says one economics expert who spoke with ABC News. But 2022 was a stomach-churning, roller-coaster ride for investors and major players in the market.

The prices of popular cryptocurrencies plummeted throughout 2022. Moreover, some cryptocurrency companies and their founders are facing bankruptcy and even the threat of imprisonment.

A representation of bitcoin is seen in front of a stock graph in this illustration taken May 19, 2021.

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Here are some of the events that shook the cryptocurrency world to its core in 2022:

Bitcoin, other currencies plunge

Some experts, including David Yermack, a professor of finance at the New York University Stern School of Business, say crypto’s free fall started after investors began selling off digital assets in response to the Federal Reserve’s interest rate hikes. The market took a nosedive after Celsius Network — a former cryptocurrency lending company — announced it was pausing all withdrawals and transfers between accounts in order to “honor, over time, withdrawal obligations.”

Performance of 10 Major Cryptocurrencies Main

ABC New Photo Illustration, Getty

Celsius had roughly 1.7 million customers and more than $10 billion in assets, The Associated Press reported.

A drop in the crypto market in the first half of a year is not unusual, Yermack told ABC News.

Performance of 10 Major Cryptocurrencies

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“Cryptocurrency has been volatile throughout its history and has experienced a large number of sharp rises and falls,” Yermack told ABC News.

What really affected the market, he said, was the collapse of TerraUSD, a payment platform for so-called stablecoins.

‘Stablecoins’ take a hit

Stablecoins are a form of digital currency backed by another form of currency like the U.S. dollar or a commodity like gold, according to experts who spoke with ABC News. They are designed to be less volatile than other forms of cryptocurrency. But some of the heaviest-traded stablecoins saw a massive drop in value in 2022.

The most notable hit was the collapse of the Luna token and its associated …….


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