In January 2023, ViaBTC Capital and CoinEx jointly released the 2022 Crypto Annual Report to offer data analysis and insights across nine sectors including Bitcoin, Ethereum, stablecoins, NFT, public chains, DeFi, SocialFi, GameFi and regulatory policies. This report also predicts the crypto trend in 2023.
According to the report, the entire cryptocurrency industry turned bearish in 2022, impacted by factors such as the macro environment and the bull-to-bear transition. Especially after the Terra meltdown in May, most cryptocurrency sectors were hit with the bearish impact. Below you will find an overview of the individual segments.
In 2022, Bitcoin’s overall performance remained sluggish, with significant declines in price and trading volume compared to 2021. The price even fell below the peak of the last bull market in late 2022. Bitcoin price action throughout the year is obviously affected by the pace of US interest rate hikes, but as US interest rate hike policy continues to advance, its impact on bitcoin price is gradually diminishing. In BTC mining, network difficulty remained at an all-time high. Meanwhile, mining revenue plummeted and miners had to shut down their old models. Affected by multiple factors, the mining industry has experienced a strong crowding-out effect that has driven small-scale mining owners out of the market for a variety of reasons. At the same time, long-established mining pools and mining farms have been able to maintain some stability.
Ethereum primary stats trended down in 2022. Along with the secondary market price and transaction volume, on-chain data including TVL, transaction cost, active address and burning volume also collapsed. Despite this, the network has made great strides in 2022. On September 15th, Ethereum completed the historic transition from PoW to PoS. The merger significantly reduced the energy consumption and the daily capacity of the network, thereby reducing dumping pressure from the secondary markets. Meanwhile, Layer 2 projects like Arbitrum, Optimism, zkSync, and Starknet have fully or partially launched their mainnet. Although their daily transaction volume was far below that of Ethereum mainnet, the projects surpassed Ethereum in terms of address count. Furthermore, their gas fee was generally 1/40th of that charged by Ethereum. At the same time, the network saw an exponential increase in gas fees in 2022.
The stablecoin market as a whole has been stable in 2022. Notably, the supply of stablecoins fell from $157 billion to $148 billion over the year, down 6%. In this respect, the decrease was not significant. In terms of centralized stablecoins, USDT maintained its dominance while BUSD is growing rapidly on the back of Binance. In contrast, algorithmic stablecoins were hit hard by LUNA’s fall, which shook confidence in decentralized stablecoins and reduced trading volume. As a result, the number of new decentralized stablecoins fell significantly.
4. Public chains
Despite the harsh market conditions in 2022, public chains remained a highly competitive sector. Due to the demand overflow caused by the Ethereum network congestion, the new low-fee public chain maintained brilliant performance before May. However, as various bad news brewed and brewed, a succession of bankruptcies ensued. Many public chains were badly hit, and the drop was even worse than Ethereum’s. In May, Terra collapsed in just a few days, becoming the first known public chain to fall. Furthermore, Terra’s collapse was also a signal that the market was going full bearish. In November, hit by the fall of FTX and Alameda Research, Solana’s token price and TVL plunged again, and projects within its ecosystem were also hit. Other new chains like Fantom and Avalanche also had problems. At the same time, a number of new public chains debuted in 2022, including Layer 2 projects like Arbitrum and Optimism, and meta-related chains like Aptos and Sui.
Over the past year, the NFT sector has declined after its initial boom. In April, NFT’s market cap reached $4.15 billion, an all-time high; In May, the sector’s trading volume hit a record high of $3.668 billion, fueled by the boom in Otherside, a Metaverse NFT collection developed by Yuga Labs. But soon after, as the NFT market became sluggish, the trading volume dropped. Meanwhile, the price of blue-chip NFTs as well as ETH price tumbled, both negatively impacting the market. On the other hand, the number of NFT holders continued to grow, reaching an all-time high in December.
DeFi’s TVL also trended down in 2022. Notably, during the LUNA/UST meltdown in May, mainstream coins experienced the most spectacular crash in cryptocurrency history, which was followed by a TVL collapse. Additionally, DeFi has been hacked frequently over the year, raising security concerns for DeFi. In terms of innovation, although there have been trending hypes surrounding DeFi 2.0 from time to time during the first two quarters of 2022, along with the slump of OHM and the (3, 3) meme, DeFi 2.0 has proved to be an almost entirely false narrative , and the market turned its attention back to DeFi 1.0 infrastructure projects like Uniswap, Aave, and MakerDAO. Despite the bearish conditions, mainstream DeFi projects including AAVE and Compound managed to maintain stable operations and attract many new users from certain CeFi projects (e.g. Celsius and FTX).
In 2022, the blockchain industry continued to explore new possibilities for SocialFi. Iconic terms such as Fan Token, Soulbound Token (SBT), Web3 Social and Decentralized Identity (DID) popped up throughout the year, but PMF (Product-Market Fit) was never identified. Despite this, SocialFi managed to present us with a number of star projects, including the Web3 lifestyle app STEPN with SocialFi elements, the login network Galxe, the BNB chain domain name service SPACE ID, the Social Graph Lens Protocol and the gamified social Web3 Learning Platform Hooked Protocol. Aside from that, the 2022 World Cup in Qatar has also helped Fan Tokens attract a lot of attention in the market. As a result, instead of crashing due to the bearish impact, Fan Tokens also performed slightly better in 2022 than in 2021.
2022 was also the beginning of the GameFi bear. There was no significant innovation in the P2E blockchain game model. As user and trading volume growth slowed, institutional investors turned away from the P2E model. In the first half of the year, the Move-2-Earn model developed by STEPN, with its innovative dual tokenomics and marketing approach, has taken the spotlight and brought new momentum to GameFi. Last year, blockchain projects raised the largest funds in April, with blockchain investments totaling $6.62 billion. However, the market did not respond to other project teams focused on the Reality Plus token model. As the multi-chain ecosystem became more popular, Ethereum maintained its dominance in the GameFi ecosystem, but the growth rate of projects on Ethereum could not match that of BNB Chain and Polygon. Additionally, most chains relied heavily on their top projects, and there were still many low-quality GameFi projects with a small user base, sub-par interactions, and low trade volumes.
9. Regulatory Policies
In general, 2022 has been full of ups and downs for the cryptocurrency industry, but the regulations are going in the right direction. Over the past year, regulators in developed countries have made great strides. The United States has published a regulatory framework for cryptocurrencies; the European Union initially approved the MiCA Law and the TFR Law; the UK and South Korea have made progress in setting up the relevant organisations; Russia and Hong Kong promoted the discussion and implementation of policies for mining cryptocurrencies and securities of virtual assets. The turmoil in the cryptocurrency industry in 2022 was partly the result of the sharp drop in funds and partly the result of regulatory loopholes and crackdowns. Last year, the bankruptcies of Terra and FTX, two top cryptocurrency projects, prompted national regulators and law enforcement agencies to further improve their oversight and investigations into cryptocurrencies.
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