Q2 2022: Five stories that shaped cryptocurrency
Quarterly retrospective covering April 1–June 30, 2022. Dated June 30, 2022. Stories selected for market impact, policy significance, and consequences for cryptocurrency infrastructure.
1. TerraUSD and Luna collapse
TerraUSD lost its dollar peg in May, and the mechanism intended to restore it by exchanging UST and Luna instead accompanied a collapse in both tokens. TIME reported on May 17 that UST was trading around 12 cents while Luna, which had reached $116 in April, was worth fractions of a penny. The failure destroyed confidence in a prominent algorithmic stablecoin and the high-yield ecosystem around it. Its broader significance was the exposure of risks in systems whose stability depends on continued confidence in another volatile token. Source: TIME, May 17.
2. Celsius freezes customer withdrawals
Celsius announced a suspension of withdrawals, swaps, and transfers on June 12 U.S. time, citing extreme market conditions. Customers who had treated the lending platform as a place to hold assets and earn yield suddenly lost access to their funds. The freeze turned an abstract concern about liquidity into an immediate problem for depositors, including those trying to manage loans backed by cryptocurrency. It highlighted the difference between holding coins in a personal wallet and accepting the credit, custody, and contractual risks of a centralised lending business. Source: The Block, June 12–13.
3. Three Arrows Capital is ordered into liquidation
A British Virgin Islands court ordered the liquidation of crypto hedge fund Three Arrows Capital on June 27, with the development reported on June 29. The fund’s distress added a major institutional failure to a quarter already shaken by Terra and falling token prices. Its significance extended to firms that had lent to it or otherwise depended on its ability to meet obligations. The episode brought counterparty exposure and interconnected borrowing into focus, showing that an institutional trading business could transmit losses well beyond its own investors. Source: Sky News, June 29.
4. Bitcoin falls below $20,000
Bitcoin dropped below $20,000 on June 18 for the first time since late 2020, while Ether also fell below $1,000. The move brought the market back beneath price levels associated with the previous major bull cycle as investors reduced exposure to risky assets and cryptocurrency businesses faced liquidity pressure. For miners, borrowers, and investors, the decline changed the economics of positions built during the boom. It was a market-price milestone rather than a change to Bitcoin’s underlying issuance rules or transaction-validation process. Source: PBS News, June 18.
5. EU negotiators reach a provisional MiCA agreement
The Council presidency and European Parliament reached a provisional agreement on the Markets in Crypto-Assets regulation on June 30. The proposed framework covered issuers and service providers, including authorisation requirements for firms operating in the EU and provisions addressing stablecoins and consumer protection. The agreement mattered because a large economic bloc was moving toward a shared set of cryptocurrency rules rather than relying solely on national arrangements. It remained a legislative agreement requiring formal adoption and subsequent implementation, with operational obligations to follow the regulation’s eventual timetable. Source: Council of the European Union, June 30.