CoinGecko calls 2022 a "terrible" year for the cryptocurrency industry

In the second quarter of 2022, the total capitalization of the cryptocurrency market fell by more than 50%, whilethe DeFi sector has dropped by almost 75%. This is stated in the CoinGecko report.

“It looks like 2022 will be a terrible year for the cryptocurrency market. […] Compared to the current situation, the first quarter appears to be the calm before the storm,” the analysts wrote.

According to CoinGecko, the capitalization of the 30 largestcryptocurrencies are down 68% from their November 2021 peak of $1.8 trillion. The reason is the collapse of the Terra ecosystem and the subsequent problems of major industry players.

Analysts noted that spot trading volumes remained "relatively stable" in the second quarter. The observed bursts are also due to the above factors.

Data: CoinGecko.

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

Data: CoinGecko.

During the second quarter, the capitalization of the DeFi sectordecreased from $142 billion to $36 billion. The sharp drop in TVL coincided with the collapse of the Terra ecosystem - at its peak, its figure exceeded $35 billion, according to DeFi Llama.

Data: CoinGecko.

Analysts drew attention to a decrease in on-chain activity in decentralized applications - a drop in the daily number of users was recorded by 34.5% compared to April 1, 2022. 

The spikes in the indicator are also due togeneral market shocks. After the collapse of Terra, users massively withdraw funds to the Curve Finance and Uniswap protocols. After discovering the problems of Celsius and other centralized platforms, they turned to DeFi services.

Data: CoinGecko.

During the reporting period, NFT trading volume also decreased by 26.2%. In June, the figure was $830 million, which is the worst result in the last year.

Data: CoinGecko.

Investor Michael Burry, who previously predicted the 2007 mortgage crisis, admitted that the current market situation is the middle of a bearish cycle for bitcoin.

Let us remind you that according to CoinShares analysts, digital gold quotes will reach another historical high in the next 24 months.

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