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Home Blog miners sell-off and recession risk
Article by Yunis
26 December 2022 (Updated 16 June 2024)

Central banks are tightening monetary policies and asset prices are decreasing so the crypto prices are. The total crypto market cap went down to 750$ Billion since it reached 3$ Trillion in November

Recession in US and miners' sell-off are the new threats in 2023 after the crypto market suffered crypto finance companies' bankruptcies. Contagion is driving the market.
2022 summary: Tulipmania and Creative Destruction
  • The total crypto market went down from $3 Trillion to $750 Billion in less than two years.
  • The surge in crypto prices in 2021 is similar to the Tulip mania in European history.
  • Over-leveraged crypto companies left millions of victims behind.
  • Recession is at the door and the FED doesn't have many tools on the table.


2022 was definitely a disastrous year after the glorious year 2021 in crypto’s history. The story actually began in 2020 with the pandemic. The total market cap of the entire crypto was around $250 Billion in February 2020. People got locked down in homes during the pandemic and started to explore the digital world more. Most people purchased their first crypto during the pandemic. Countries all around the world printed money and injected it into the markets to balance the pandemic’s negative effect on economies. Artificial fiat money abundance led asset prices to surge to new all-time highs. It was a great environment for the baby crypto market to flourish. The world finally approached crypto as a tangible investment asset that has actual real-life utility and we started to see Bitcoin, Ethereum and other leading cryptocurrency prices on TV screens along with S&P, DOW, and  Nasdaq indexes.


2021 became a cornerstone for crypto markets. BTC price first touched $65k in May and then $69k in November and reached its all-time high (ATH). The total market cap of the crypto reached $3 Trillion during the ATH in November. Thousands of new crypto and blockchain projects are released, launched, merged, and acquired every day. Some projects raised millions of dollars just with a website telling people about their unrealistic ideas. But, of course, no party goes on forever.
We must know and understand what tulipmania is to understand the crypto markets. Tulipmania is an economic crisis in the Netherlands’ history. Tulip was an oriental foreign flower for the Dutches. Tulips were hysterically traded and contracts changed hands five times a day. The price of a common tulip bulb reached enormous prices until the market realized that there is actually no benefit to having a tulip bulb and that the tulip supply can be increased much higher. Tulipmania refers to a speculative bubble in an asset price.

What happened in 2021 was Tulipmania.

What happened in 2021 was Tulipmania.


We are about to enter 2023 this week. We are leaving a catastrophic year for crypto behind. The year 2022 started with efforts to make new ATH in crypto prices but it didn’t last long to realize that crypto prices have made a double top on charts. The central banks of developed countries were serious about tapering the money supply they created in 2021. The fiat money abundance created an inflation monster and that monster was eating the ordinary people’s wealth. Inflation is very harmful to low-income people while it is beneficial for wealthy people.
The Fed began tightening the monetary policy in March which caused earthquakes in an over-leveraged market. The crypto finance companies that grew in an easy-money market and adopted risky policies, faced the truth and started to hit the wall. The party was over and it was time to stop being generous with bonuses, promotions, and airdrops. The crypto market tumbled and the market cap went down to under $1 Trillion.
We witnessed very big collapses including Terra’s Luna, Celsius Network, 3AC, Voyager, and finally FTX with Alameda. Some terrible events happened in the market. Some big pockets left millions of victims behind and were able to get away with it. It is unbelievable to see a crypto lending company that has raised over $850 Million from the world’s leading financial institutions has filed for bankruptcy. Yes, I am talking about the Celcius Network. It is not very different for FTX’s fall too. Noone of those responsible is in jail.

«Creative destruction» is a term in economics to explain that bad experiences and crises are good for the future because they eliminate the weak and bad players on the market and test the good and strong players. 2022 was a great year to get rid of bad apples. Bitcoin network stayed strong all that time and showed no congestion, or shortage.


It is very nice to see snow in Christmas time but not for all. Extreme weather conditions in the last week of December challenge many Bitcoin miners in the States. We might think of it as a piece of unimportant news at a different time. But this time it is different. US Miners are having a difficult time keeping up their operations. Core Scientific is a leading miner in the US and it filed for bankruptcy. Core Scientific is a publicly traded Bitcoin mining company. Low Bitcoin prices are a big problem for the mining industry. We hope the Core Scientific case is not going to be contagious and lead other miners to sell their Bitcoins. Because if miners start selling, it will cause a big sell-off in the market.

Recession in States.

If inflation was the word of the year in 2021, the recession is the word of the year in 2022. Many economists are expecting hard lending in the US economy because of FED’s hawkish standing. The more FED increases the rates, the fewer chances, the market players can reach the capital. It is getting harder and harder to reach the capital for businesses. Preferring high-interest rates as a weapon against high inflation is a risky action. But the FED doesn’t have many tools on the table. This situation is called «White Rhino».
The mortgage crisis in 2008 was called a «Black swan» event. It means that no one expects it, but when it occurs, it creates a big impact. The white rhino is the opposite, everyone expects it, but there is not much to do against it other than just waiting for it to come. A big angry white rhino is charging toward us and we can’t run away or hide in a flat savannah. The US economy is not expected to recover fast in 2022.

US Debt Ceiling.

Us Government is about to face a shutdown once again this year. Ledn's Co-Founder Mauricio Di Bartolomeo published an article about this last week. It is expected to see that the US government will run out of balance this year. Congress set a budget with a debt ceiling which is the limit that the US government can spend. Ms Yellen as the US Treasury Secretary is responsible for the control of the government’s budget. She will happily spend the money to boost the economy if the debt ceiling is increased. A bigger allowance for the government will be positive news in the market. Asset prices may see relief and start going high if the debt ceiling problem is solved and fresh capital is injected into the markets.

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