Crypto endured a major hangover year in 2022 after a 2020-21 boom during the central banks' Covid liquidity party. The emerging blockchain space was battered by central banks removing the punch bowl, harsh macroeconomic environment, bankruptcies, exchange blowups, stablecoin implosions, and even criminal charges against top crypto executives. 

"Consistent interest rate hikes and quantitative tightening in 2022 granted us a devastating hangover. Fortune did not favor the brave, and we entered a consistent doom cycle of default, fraud, and contagion. A financial crisis with seemingly no end that still ravages our industry. In 2022, the naked swimmers were exposed and bad apples got eliminated. This is promising through long-term lenses, while ever so painful in the short term," Vetle Lunde, research analyst at Arcane, wrote. 

Lunde wrote if 2022 had one key lesson for the crypto industry, it would be the following: "your funds in someone else's custody is someone else's liability, and their intentions could be harmful. While there are good arguments for storing funds at exchanges, traders should strive to avoid concentrating risks on one venue."

Arcane's analyst put together the top headlines that defined the crypto industry in 2022 -- much of the headlines were doom and gloom. 

Lunde pointed out Bitcoin recorded the second worst year-to-date returns in existence. He called the down move in crypto "a painful ride." 

Lunde continued with an outlook for 2023, expecting a calmer market due to declining volatility. 

And he revealed further the current drawdown in Bitcoin appears to follow similar bear market patterns in previous cycles.  

And one silver lining the analyst said about the FTX debacle is that it might increase "more rapid progress with regulations, and we view both positive signals related to U.S. spot BTC ETF launches and more coherent classifications of tokens as a plausible outcome by the end of the year, with exchange tokens being particularly exposed for potential security classifications."

Here is Lunde's core 2023 forecast for crypto:

Much of the crypto down cycle has come since the Federal Reserve embarked on its most aggressive tightening scheme in decades. 

And rate traders are already pricing in the possibility the Fed might have to begin cutting late in the second half of 2023. 

He also noted Bitcoin liquidity is drying up as the coins are being pulled off the markets. 

The backward-looking review and forward outlook might suggest crypto winter has peaked, while others, such as David Marcus, CEO and founder of Lightspark, recently warned crypto will need until at least 2024 to "recover from the abuse of unscrupulous players."