There's an expression crypto enthusiasts use, with fingers crossed, in the hopes a particular digital currency's value will blast off: "To the moon!"

Much of crypto did graze the stratosphere at the start of 2022, when enthusiasm was astronomically high, but a few months later it all came crashing back down to Earth.

Bitcoin's value is roughly a fourth of what it was a year ago, and the industry is just starting to grapple with the fallout from the catastrophic implosion of the cryptocurrency exchange FTX.

In the future, 2022 may be regarded as a turning point for the world of virtual currencies, when they lost their luster and were cast out as a fringe product most people approach with skepticism and caution. Or it may simply be remembered as a stretch of excruciating growing pains for an industry still in its infancy.

Regardless, 2022 was one for the crypto history books.

How it started

The ads were everywhere — on TV, on bus stops, and even in fortune cookies. Crypto companies spent tens of millions of dollars on marketing, swamping the Super Bowl with commercials. The currencies and tokens may have been virtual, but crypto became more real for many Americans in the early months of the year.

The industry seemed to reach "peak hype" in January and February, says Molly White, a fellow at Harvard University who is a crypto skeptic. She runs the site Web3 is Going Just Great.

"Prices had hit all-time highs," she says. "People were making irrational amounts of money."

The value of the most famous cryptocurrency — bitcoin — had just set a record, and the industry was trying to "mainstream itself," as White puts it. Meaning, crypto companies were doing all they could to bring in more customers.

A woman better known for setting fashion trends than financial ones, Paris Hilton, appeared on The Tonight Show Starring Jimmy Fallon in January. After talking about her recent marriage and trip to Burning Man, the former reality TV star went deep on the NFTs, or non-fungible tokens, she was hawking.

The audience seemed a bit perplexed when she promised, Oprah-style, to give each of them an NFT — another kind of digital asset that is basically cartoony crypto art. But when Fallon, who is himself an NFT enthusiast, seemed blown away, they applauded.

"Peak hype," though, crested quickly.

How it's going

Like just about everything else in finance, crypto saw its prices tank when the Federal Reserve started to raise interest rates to fight high inflation.

That shocked many of bitcoin's biggest backers, many of whom believed the virtual currency would be an inflation hedge, like gold. They had predicted bitcoin's value would rise during a period of high inflation; instead, it was falling.

What's called a "crypto winter" — a downturn that has gone on and on — began before 2022 even reached its halfway point.

"You know, we've been living in the 'crypto winter' for the better part of a year," says Lee Reiners, who teaches cryptocurrency law at Duke University.

Individual investors have been hurt, especially people who bought digital assets near the highs. But according to Reiners, the crypto winter also revealed larger, systemic problems in the industry.

"It really exposed a number of crypto firms who were, you know, overextended, had poor risk management, or otherwise were engaging in fraudulent activity," he says.

A string of failures started in May: a pair of cryptocurrencies called Terra and Luna, the trading platform Voyager, a crypto hedge fund called Three Arrows Capital, BlockFi, Celsius ...

The list goes on and on, and according to Reiners, it highlights something troublesome about crypto.

"These firms are deeply interconnected, and so, the moment you kind of have one problem somewhere in the crypto sector, it spreads very, very quickly," he says.

Financial regulators started to crack down, as well. They even went after another big-name celebrity for how she touted "EMAX tokens." None other than Kim Kardashian had to settle with the Securities and Exchange Commission in October for more than $1 million.

And what's next

Which brings us to FTX.

At the start of 2022, the crypto company was valued at $32 billion. Now, it's bankrupt, more than a million people are worried the money they put into it has vanished, and the company's founder, Sam Bankman-Fried, has been charged with criminal fraud.

Bankman-Fried cultivated an image that made him memorable and seemingly accessible, with wild hair and a penchant for wearing shorts and T-shirts. His goal was to get more everyday people to buy crypto and more conventional Wall Street firms and funds to invest in it.

The 30-year-old was so successful at bringing crypto to the masses that he was considered the industry's unofficial spokesman. He's currently under house arrest at his parents' home in Palo Alto, Calif.

Reiners calls the swift and total collapse of FTX "the biggest event in crypto's history" — a history, he adds, that's "replete with a lot of failures and scams and frauds and hacks."

Now, people are wondering what could be the next domino to fall.

Binance is the world's largest cryptocurrency exchange, and after several big waves of panic-driven withdrawals, it looks like it has the potential to be that domino.

But the company is pushing back against fears and crypto skepticism, more generally. It has to, said White.

"If people start to question the industry as a whole, or crypto as an asset class, that is devastating for Binance," she says. "So, they are doing anything they can to prevent that from happening."

For many, it's disorienting to see how quickly crypto's fortunes reversed, and they are struggling to gauge the depth of the damage from FTX.

"I think crypto would be lucky if all they were set back [was] by a couple of years," White says.

True believers expect bitcoin will bounce back and this "crypto winter" will thaw eventually.

But for people who weren't deep into crypto — who maybe saw an ad or who were driven by a fear of missing out to dabble in buying tokens — it's a different story, especially with daily revelations from Bankman-Fried's former co-workers about how customer money was allegedly moved out of FTX and into their own pockets.

"I think people are starting to think of crypto as this big scam that they would not want anything to do with," White says.

And that poses an existential problem for crypto, she adds. Because, for it to work, it requires an ever-larger stream of people to keep buying it.