Square, another payments company, bought $50 million worth of Bitcoin and changed its name to Block, in part to denote its work with blockchain technology. Tesla bought $1.5 billion of it. Venture capital firm Andreessen Horowitz raised $4.5 billion for a fourth cryptocurrency-focused fund, doubling its previous one.
The excitement peaked last April when Coinbase, a cryptocurrency exchange, went public with a valuation of $85 billion, a coming-out party for the industry. Bitcoin crossed the $60,000 mark for the first time.
Last summer, El Salvador announced it would become the first country to classify bitcoin as legal tender alongside the US dollar. The country’s president updated his Twitter profile picture and added laser eyes, a calling card of bitcoin believers. El Salvador’s $105 million Bitcoin investment has seen its value halved as the price has fallen.
Senators and mayors across the United States began promoting cryptocurrency as the industry lobbied heavily. New York City Mayor Eric Adams, who was elected in November, said he will be taking his first three paychecks in bitcoin. Senators Cynthia Lummis, a Wyoming Republican, and Kirsten Gillibrand, a Democrat from New York, proposed legislation that would create a regulatory framework for the industry and give more authority to the Commodity Futures Trading Commission, an agency that crypto companies have openly courted.
Through the frenzy, celebrities fueled fears of missing out by lashing out at their NFTs on talk shows and pitching blockchain projects on social media. This year, the Super Bowl featured four crypto company ads, including Matt Damon, who warned viewers that “fortune favors the brave.”
That euphoric optimism was faltered this spring as the stock market plummeted, inflation soared and layoffs hit the tech sector. Investors started losing confidence in their crypto investments and reallocating money to less risky assets. Several high-profile projects collapsed due to redemptions. TerraForm Labs, which created TerraUSD, a so-called stablecoin, and Celsius, an experimental cryptobank, both collapsed, wiping out billions of dollars in value and sending the broader market into a tailspin.