How a Series of Crypto Meltdowns Is Reshaping the Industry 

The history of cryptocurrencies has rarely been dull, but the latest meltdown delivered a series of shocks that shook the foundations of digital assets. A cascade of blowups, including the collapse of a so-called stablecoin in May and the epic unravelling of the FTX crypto exchange in November, left a wave of bankruptcies. The events eroded the trust of more mainstream investors who were eager to capitalize on rising interest in Bitcoin and the vision of decentralized finance. The turmoil has prompted calls for regulators to move more urgently to protect consumers.

After peaking in November 2021, crypto assets suffered a $2.2 trillion wipe-out in the following 12 months, with their combined market value tumbling by 73%, according to data from tracker CoinGecko. In the past, such collapses — also known as “crypto winters” — were triggered by events within the industry itself, such as the failure of an exchange or a regulatory crackdown. This one began with something external: central banks hiking interest rates to combat a post-pandemic surge in inflation, which reduced investor appetite for riskier assets including crypto.