CoinGecko calls 2022 a ‘horrendous’ year for the cryptocurrency industry

In the second quarter of 2022, the aggregate market capitalization of the cryptocurrency market fell by more than 50%, while the DeFi sector’s metric declined by almost 75%. This is according to a CoinGecko report.

“It seems that 2022 will be a horrendous year for the cryptocurrency market. […] Compared with the current moment, the first quarter appears to be a lull before the storm,” the analysts wrote.

According to CoinGecko, the market capitalization of the 30 largest cryptocurrencies fell 68% from the November 2021 peak, when the figure stood at $1.8 trillion. The cause was collapse of the Terra ecosystem and the subsequent problems of major industry players.

Analysts noted that spot trading volumes in Q2 remained “relatively stable”. The spikes observed were also driven by the factors mentioned above.

Another reason for the crypto market downturn was the global macroeconomic crisis. This is evidenced by a high correlation (0.9) between the S&P 500 index and the market capitalization of the 30 largest digital assets.

During Q2, the DeFi sector’s capitalization declined from $142 billion to $36 billion. The sharp drop in TVL coincided with the Terra ecosystem collapse — at its peak, the metric exceeded $35 billion, according to DeFi Llama.

Analysts noted a decline in on-chain activity in decentralized applications — the daily number of users fell by 34.5% compared with April 1, 2022.

The spikes in the metric were also driven by broad market turmoil. After the Terra collapse, users moved funds into Curve Finance and Uniswap protocols. After Celsius and other centralized platforms’ problems were revealed, they turned to DeFi services.

In the reporting period, NFT trading volume also declined by 26.2%. In June the figure stood at $830 million — the worst result in the last year.

Investor Michael Burry, who predicted the mortgage crisis of 2007, allowed that the current market situation is the middle of a bear cycle for Bitcoin.

Analysts at CoinShares expect digital gold to reach another all-time high in the next 24 months.

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