Bitcoin 2022 Review: Coin price falls over 65%, Computing Power steadily rises, application ecosystem encounters obstacles

In 2022, the Bitcoin market experienced significant fluctuations. Affected by the global liquidity tightening, Bitcoin ended the bull market of the previous two years and entered a turbulent downward bear market. This article reviews the changes in Bitcoin over the past year from the perspectives of the trading market, on-chain data, chip structure, mining, and application ecology.

Trading Market: Coin prices plummet, exchange inventory decreases

In 2022, the overall price fall of Bitcoin exceeded 65%, dropping from $47,700 at the beginning of the year to around $16,600 by the end of the year. There were 6 instances throughout the year where the daily drop exceeded 10%, with 2 occurrences in November alone. The price showed a "stair-step" decline, with significant drops typically occurring within a single day.

The exchange's Bitcoin inventory decreased from 2.6423 million coins to 2.1086 million coins, a decrease of approximately 20.20%. Following the FTX incident, the exchange inventory fell rapidly, with a reduction of about 240,000 BTC over 11 days from November 6 to 17. The market estimates that the leverage ratio will rise and then fall within the year, reaching a peak of 40.47% in mid-October, before dropping to below 30%.

The number of Bitcoins held by institutions has moderately decreased, down 4.54% for the year. The OTC premium rate for institutional assets has continued to decline, falling from -20.74% in January to -44.12% in December, with a drop of over 110% in the premium rate.

On-chain data: activity decline, transaction scale rise

In 2022, the on-chain user activity of Bitcoin saw a decline. The monthly average cumulative active addresses were about 27.82 million, a decrease of 7.67% compared to the previous year; the daily average active addresses were about 916.5 thousand, a decline of 7.70%. A total of 141 million new addresses were added throughout the year, a decrease of 9.50% compared to the previous year.

The total number of transactions for the year reached 88.99 million, a decrease of 4.13% compared to the previous year. However, the total transaction volume amounted to 1.256 billion BTC, a significant rise of 36.37% year-on-year. The average monthly transaction volume in the first half of the year was noticeably higher than in the second half, indicating a decrease in capital activity in the latter half.

On-chain transaction fees are also showing a downward trend. The total transaction fees for the year are approximately $137 million, with an average daily transaction fee of about $1.53.

Chip Structure: Profit Chips Decrease, Token Holding Period Diversification

In 2022, the average proportion of profitable Bitcoin chips was 60.50%, showing a significant downward trend throughout the year, decreasing from 74.54% at the beginning of the year to 55.77% at the end of the year. After the FTX incident in November, the proportion of profitable chips once fell below 50%.

The "whale" address ( experienced a process of concentration followed by dispersion of chips. The total balance of the top 100 addresses rose from 15.03% at the beginning of the year to 15.81% by mid-June, and then fell to 14.82% by the end of the year.

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The number of small addresses has risen significantly, with a marked increase in addresses holding less than 10 BTC. The proportion of coins held for 1-2 years has grown the most, reaching 20.37%. There has also been an increase in short-term and ultra-long-term holding addresses. Overall, there is a trend of polarization towards smaller holdings and holding periods.

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Mining: Computing Power rise, Revenue fall

In 2022, the overall mining difficulty of Bitcoin showed an upward trend, with 25 adjustments throughout the year, including 15 increases and 10 decreases. The average daily Computing Power was approximately 218.5 EH/s, with an annual rise of 11.21%. However, the drop in coin prices was greater than the growth in Computing Power, squeezing the profit margin for mining.

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The daily mining revenue per T of Computing Power has fallen from $0.25 at the beginning of the year to $0.06 at the end of the year, a decline of 76%. After September, this indicator has remained below $0.1. However, the annual miner position index )MPI( averaged -0.52, indicating that the overall selling pressure is not significant.

![16 charts to understand Bitcoin this year: Over 140 million new addresses, with an average of 60.50% of profitable chips])https://img-cdn.gateio.im/webp-social/moments-0dab495f506fecaaf164fbb0002ce32d.webp(

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Application Ecosystem: Lightning Network and WBTC Stalled

The number of Lightning Network channels decreased from 83,000 to 67,700, a drop of 18.53%. However, the funding capacity rose by 46.19% over the year, reaching around 4,760 BTC.

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The total supply of WBTC first rose and then fell, with an overall decline of 24.48% within the year, decreasing from 258,100 to 194,900. In late November, the WBTC/BTC exchange rate briefly fell below 1, resulting in a temporary decoupling.

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Overall, in 2022, Bitcoin experienced significant fluctuations amid a sluggish market, but the on-chain fundamentals and mining development remained relatively stable. In the future, with improvements in the macro environment, Bitcoin is expected to regain its upward momentum.

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