It’s safe to say that 2022 wasn’t the best year for crypto. By late January, Bitcoin had already shed half its value from its all-time high set the previously November - nearly $69,000. And Bitcoin prices stayed on a downward trend that only accelerated  after the first major crisis of 2022, the collapse of an algorithmic stablecoin called TerraUSD. The implosion of what was once considered an ambitious experiment for DeFi sent shockwaves  through the industry, ultimately triggering the collapse of crypto hedge fund Three Arrows Capital and bankruptcies at crypto lenders Voyager Digital and Celsius. 

It started to feel a bit like the Hunger Games - crypto CEOs and other senior executives racing for the exit, true believers getting into Twitter fights about whether centralisation was the real enemy, all against a backdrop of conferences and parties where people tried to rekindle enthusiasm for their Bored Ape collections.  Then - most recently of course - the stunning collapse of one of the most significant crypto exchanges in the sector, FTX and the resignation of its 30-year-old CEO Sam Bankman-Fried. Quite the year. And it isn’t over yet.

In this episode - a breakdown of the year’s biggest stories with Bloomberg reporters Vildana Hajric and Emily Nicolle, with key takeaways and a look ahead to next year.

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For the last six months or so, the digital asset industry has been knee-deep in the trenches of a ‘crypto winter.’ Now, the demise of Sam Bankman-Fried’s FTX and Alameda Research have produced a dramatic decline in market liquidity. While these bankruptcies will take years to be resolved in the court system, the effects of the collapse on the market have been swift. Investors and traders are only just beginning to grapple with the consequences.

Bloomberg reporter Katie Greifeld joins the show to discuss.

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What do pandemic stimulus funds have to do with the recent collapse of crypto prices and entities like FTX? According to Bloomberg Opinion writer Robert Burgess, the answer is basically everything.

As he wrote in a recent column, “When historians look back on the spectacular rise and collapse of the cryptocurrency market, they will conclude that it couldn’t have happened without the pandemic. And they’d be right.”

This isn’t as controversial an opinion as it might seem. For more, Robert joins this episode.

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Listen to the final audio excerpt from a special issue of Businessweek magazine, The Crypto Story.

Bloomberg columnist Matt Levine uses the full issue to explain where crypto came from, what it means and why it matters.

This episode is voiced by Bloomberg Businessweek editor Mark Leydorf.

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The Sam Bankman-Fried apology tour continued this week, despite a number of high-profile lawyers — including one who represented Bernie Madoff — saying that SBF really needs to stop talking. Speaking of lawyers: as the bankruptcy winds through the courts, the 30-year-old has hired a new lawyer, Marc Cohen. Cohen had previously been one of the lawyers who represented convicted sex offender Ghislaine Maxwell.

Also up for discussion on this episode: that big Ethereum move to proof-of-stake earlier this year — dubbed The Merge. We consider whether it’s really had a meaningful effect on energy consumption. A new academic paper asks: What if all those computers no longer employed on proof-of-work duty…have just been reassigned ….to mine other energy intensive tokens?

And why is Senator Elizabeth Warren asking questions about  digital-asset-focused Silvergate Bank? We find out. Bloomberg reporter Annie Massa and senior editor Dave Liedtka join the show to talk about these stories and more.

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Financial markets can be subject to a fair amount of groupthink. The herd effect. Mob mentality, even. There’s actually some really interesting research into this: check out for example the paper, “Bubbles, Human Judgment, and Expert Opinion” by Robert J. Shiller.  Here's additional research into herd effect: Herding behaviour in digital currency markets: An integrated survey and empirical estimation.]

Crypto investors are no exception: and their in-group behavior also features a lot of catchphrases. Like the famous “GM”, and the infamous "have fun staying poor." Or the tongue-in-check “Bitcoin will fix this”, where “this” is basically any social or economic issue you can imagine.

In this episode Bloomberg senior markets editor Mike Regan and crypto blogger Emily Nicolle assess the mood among the crypto faithful - and explain why some of them are now evangelizing cold wallets. 

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Sam Bankman-Fried used to say he was a man on a mission. That mission: giving away more than a billion dollars in the service of a movement known as “effective altruism." Through personal giving, and through a philanthropic unit called the FTX Foundation, Bankman-Fried appeared to support causes ranging from pandemic prevention to research into climate change.

Fast forward a bit, and that message of “using wealth to empower people and projects that are doing the most to make positive, long-lasting change” - a marketing line from the FTX Foundation’s website - now rings hollow. 

Bloomberg reporters Sophie Alexander and Laura Davison join this episode with the backstory on SBF and effective altruism.

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“It’s time to rebuild…” is a catchy phrase often said by crypto industry folks after massive implosions, like the one we just had with FTX. In the aftermath of these moments, investors are known to imagine all the potential for growth after the downturns. 

But this year in crypto the time for rebuilding has come often far too often, some might say. Nearly every crypto believer is saying let’s rebuild. But a valid question would be: rebuild what? Bloomberg crypto blogger Emily Nicolle joins senior editor Philip Lagerkranser in this episode to talk about what, (if anything) might be rebuilt.

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The interplay of money and politics in the US is real, and well established. And that includes when that money is either in the form of crypto, or comes from people who made their fortunes in digital assets. 

The recently concluded US Midterm Elections featured several candidates - including winning ones - whose campaigns were financed in part by crypto-related donors and donations. Among those donors: Sam Bankman-Fried and Ryan Salame of FTX, who supported candidates on opposite ends of the political spectrum. The collapse of FTX has led to some politicians and lawmakers who received from these donations now attempting to distance themselves entirely from their benefactors. 

For more on the state of crypto money and politics in the US, Bloomberg reporters Bill Allison and Allyson Versprille join this episode. 

Subscribe to the Bloomberg Crypto Newsletter at https://bloom.bg/cryptonewsletter 

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Listen to the sixth audio excerpt from a special issue of Businessweek magazine, The Crypto Story.

Bloomberg columnist Matt Levine uses the full issue to explain where crypto came from, what it means and why it matters.

This episode is voiced by Bloomberg Businessweek editor Mark Leydorf.

See omnystudio.com/listener for privacy information.