My 2022 Predictions Reviewed
I got some big trends right but missed the big market selloff. Here's the details.
In December last year, I posted a year in review article with several predictions for 2022. Overall, I didn’t see the Crypto and NFT prices crashing, so this is not going to grade out high. Let’s break it down and see how I did.
I didn’t explicitly make a price prediction in that article, but I was definitely buying the market late last year. Bitcoin peaked in November 2021 in the $64K area and had retreated to $47K area by year’s end. I was nibbling on the lower prices around that time. Currently, $BTC is around $17K, so down another 64% from year end. Ugh.
I covered the mainstream ascendancy of Crypto and predicted we would see more of that in 2022. This one I got right. There was no hiding from Crypto this year. It was in the news constantly, though not all for good reasons. Crypto firms continued to spend big money much of 2022 to acquire new customers, but this has slowed in the past months.
Last year we had the Coinbase IPO, and I had speculated we would see other exchanges going public in 2022. If someone had pushed me a year ago to guess the next exchange to IPO, I probably would’ve said FTX. I got this one way wrong. Not only did FTX fail, but no other Crypto or web3 company got close to a public offering as the tech stock market collapsed in 2022.
I had predicted that NFTs would remain a hot topic in 2022. I thought this would come from cool new use cases across sports, entertainment, music, and video gaming. NFTs remained in the news, but for all the wrong reasons. Prices on NFTs followed the broader Crypto market lower, with top tier collections like Bored Apes and CryptoPunks down 75%+ from their highs in dollar terms. Trading volumes collapsed as well. We did see a few successful offerings in sports (DraftKings Reignmakers, Sorare in the U.S.), but there were no major hits in any categories this year.
2021 saw big money flow into dedicated Crypto and web3 VC funds, who turned around and wrote checks rapidly to startups in the sector. With funding to startups across all sectors falling in 2022, the Crypto sector was hit as well. 2021 saw $30Bn go to startups in web3. Through Q3 2022 that had dropped to about $18Bn, and the fourth quarter will be mild. Money to VC managers in the space has slowed considerably, and it is unclear whether existing commitments will be honored by LPs. I had thought we would see another big year of funding for web3. While a meaningful dollar amount hit the sector, I’m still counting this as an L.
Another area I highlighted for potential growth in 2022 was DAOs. These Crypto entities hit the bigtime in November 2021 when ConstitutionDAO made headlines. I thought we would see lots more creative and exciting applications of this tech. I’m taking this as a win. Thousands of DAOs emerged in 2022 across a huge range of areas. DAOs aren’t mainstream yet, but they are growing fast.
I didn’t cover it in my year-end post, but I was definitely critical shortly after of two problem areas that experience major shocks in 2022 – stablecoins and DeFi. In my opinion, stablecoins should be regulated like money market funds. They should be registered as securities with the SEC. They should have strict limitations on the types of securities they can hold and should make monthly disclosures with a U.S. auditor reviewing. I didn’t call the failure of Terra/Luna, but I was in the right direction here. Similarly, I think lending against highly volatile Cryptocurrencies without recourse to the borrower is bonkers. I also believe these types of securities lending structures need to be registered with the SEC with much better risk disclosure and transparency. I expected these to suffer, and both stablecoins and DeFi were hit hard.
Overall, I’m giving myself a grade of C- for my 2022 predictions. I didn’t see inflation tanking the stock market with a heavy beatdown to the tech sector. These macro factors crushed the Crypto market and stunted any growth I was looking for in web3.
I’m working through new predictions for 2023 and hopefully I’ll deliver you fine readers something more useful for next year. Stay tuned.
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