January 2022 Crypto Recap
by Martin Gaspar
Crypto Prices Decline MoM, but NFT Interest Surges
January saw Bitcoin fall from around $48,000 to $38,000 (-20%), while Ethereum declined by roughly 27% to $2,700. Total crypto market cap fell from $2.4 trillion to $1.8 trillion (-25%), which compares to an all-time high of $3.0 trillion in November 2021. The weakness in crypto seemed partly driven by concerns over the Fed’s hawkish stance in light of hot CPI prints.
NFT Search Interest Surpasses that of Crypto
According to Google Trends, search interest in NFTs surpassed that of crypto in January. The first month of 2022 saw numerous celebrities jumping onto the Bored Ape Yacht Club (BAYC) bandwagon, including Justin Bieber, Kevin Hart, Serena Williams, and Eminem, each of whom picked up a single BAYC NFT, which likely helped drive the brand’s floor price to a staggering 110 ETH by the end of the month. NFT volume was also impressive. After December broke a four-month downtrend for Ethereum-based NFT markets, NFT marketplace OpenSea hit $5 billion in volume in January, surpassing its previous monthly volume record by almost 50%. NFT marketplace LooksRare also launched, posting daily volumes greater than OpenSea, although this has been attributed to its token incentives driving trades of certain NFT collections on its platform.
More Crypto ETF Filings
Even though the Securities and Exchange Commission (SEC) rejected or postponed all spot Bitcoin exchange traded fund (ETF) applications, more firms filed for their own crypto-related ETFs. Simplify filed an application with the SEC for a Web 3.0 ETF, BlackRock filed for an ETF to track a variety of blockchain and crypto stocks, Valkyrie filed for a Bitcoin mining ETF, and Fidelity started the process of applying to create two ETFs — one a Crypto Industry and Digital Payments ETF and the other a Metaverse ETF.
Global Crypto Regulatory Developments
Crypto regulations around the world continued to evolve. Thailand scrapped a planned 15% tax withholding tax on crypto transactions and announced plans to regulate digital assets as a means of payment for goods and services. Estonia’s Ministry of Finance clarified its proposed rules for virtual asset service providers (VASPs) will not ban owning or trading crypto. Even Russian President Vladimir Putin seemed to warm up to the industry, calling attention to his country’s “competitive advantages” with regards to energy and crypto mining. On the mining front, Kosovo banned crypto mining to manage electricity consumption, while Kazakhstan restricted electricity access to miners for similar reasons.
Fed Releases Report on a Potential US CBDC
Central Bank Digital Currencies (CBDCs) saw notable developments as well. The Fed released its long-awaited report on a potential US CBDC, but did not take a decisive position on whether the US should go forward with a digital dollar. China ramped up the rollout of its digital yuan ahead of the Olympics, while Jamaica finished its eight-month pilot of its CBDC and is reportedly set to roll it out this quarter.
Crypto PAC Launches
Crypto leaders also launched a political action committee (PAC) to lobby for pro-crypto regulations. Called GMI PAC, the organization is backed by several well-known crypto firms and plans to spend over $20 million in the 2022 election cycle.
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CrossTower Inc. provides this content for general information purposes, to better inform you on your digital asset investment journey. We do not provide investment recommendations or provide tax advice. Please consult your investment professional or tax advisor if you require assistance in these areas.
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