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Blockchain, Cryptocurrency, Featured

A Review on Crypto Markets 2022

For global markets, 2022 has been a tough year. The stock market of the United States has fallen by 15% in value, the crypto markets have lost over 50% since their last high in November 2021, and the bond markets have fallen over 20%. In the early months of 2022, The Central Banks decreased the economic expansion rate, and show inflation, and increased the interest rates. The fiscal and monetary policy tightening has led to the deterioration of the conjectural strategies for investment, and the confidence of the investors to risk them. Several investors have chosen to exit or sell their entire speculative asset class. Such a macroeconomic mess has deeply affected traditional assets and puts huge pressure on the new asset class such as cryptocurrencies. 

Also Read: How PayBito Explored the Web3 Ecosystem in 2022?

Here’s How Crypto Market Has Been in 2022

The economic crisis of 2022 made the crypto market plummet by 50% causing huge losses and bankrupting top exchanges overnight. Ever-increasing liquidity, record-breaking low-interest rates, and a strong economy have set the stage for record growth in crypto adoption, and price hike in 2023. Here is a review of how the crypto industry has been in 2022. 

  • The Global GDP Dialapidated 3.2% in 2022

The geopolitical and macroeconomic headwinds have caused huge chaos in the crypto industry in 2022. To fight inflation, the central banks imposed a tightening monetary policy and hiked the interest rates. Other than that, the Russia-Ukraine war, the post-effects of the covid-19 pandemic, and the disruption in the supply chain industry have adversely affected the Global GDP which plummeted to 3.2% in 2022 from 6% in 2021. The growth rate of inflation on the other hand continued to increase by reaching around 8.8% year-over-year. 

Also Read: 2022 Retrospect: HashCash Stands Out in the Blockchain Web 3.0 Ecosystem

  • Several Events Crumbled The Crypto Ecosystem in 2022

Since the beginning of 2022, there have been several events that negatively impacted the crypto industry. Some of the notable events were the FTX collapse in November 2022, and the TERRA Stablecoin collapse in the early months of the year. Both the fallouts and the events created shockwaves in the industry and affected every player in the crypto space and cost investor confidence in a particular asset class. The crypto winter simply turned into an annual season and is still in that phase. However, for crypto enthusiasts, the crypto winter phase is quite common as the highly volatile market is usually either bullish or bearish. 

  • One Million Blockchain Gamers Were Active in 2022

Blockchain gamer graph 2022

Despite poor market conditions, there were around one million blockchain gamers active every day in 2022. There are 315,000 active gamers daily in the Wax blockchain. There are multiple games leading the list such as Farmers World, and Splinterlands. Cronos Play is a comprehensive modular suite of developer tools for the blockchain games in the Cronos ecosystem, which was announced by Cronos. It is one of the key strategies that Cronos implemented to lure millions of gamers and support several gaming platforms. 

  • Ethereum Merge From PoW to PoS Made Headlines

On 15th September 2022, the Ethereum Blockchain officially merged from PoW to PoS consensus mechanism, making headlines. It was the most foreseen event of 2022. One of the practical aspects of the Ethereum merge is that it decreased the energy consumption of the network by 99.5%. This is because the PoS consensus mechanism does not require high consumption of energy as it is in the PoW mechanism. The PoS mechanism works differently and depends on the validators for transaction verifications. The energy consumption of the PoS Ethereum blockchain is estimated to be 1% of PayPal. 

  • DEX Holds High Shares On Crypto Spot Trading Volumes

After the FTX collapse in November 2022, a high share of crypto spot trading volume has been observed in Decentralized Exchanges (DEXs). Compared to 9% in October, the DEX took 14% of the share in November. Moreover, a raise in owing noncustodial DeFi wallets indicates that the users are looking forward to owning the entire control of their assets. 

  • dApps Were Popular in 2022

DApp popularity graph 2022

The blockchain underpinned social media applications and observed steady growth in 2022. This was witnessed with the growing number of unique wallets that interact with smart contracts of social decentralized applications. 

  • Layer-1 Blockchain Is Trending

In 2022 the Layer-1 blockchains were under the spotlight namely, Sui, and Aptos. The two blockchains were developed by the Diem team of Meta. Both blockchains are similar technologies that include Move programming language, and parallel engine. Besides Layer-one blockchain, other networks such as Cronos also gained momentum in the community. 

  • ETH: A Popular Token Choice

The PoS mechanism requires locking up the tokens. This means that the token holder needs to choose between preserving liquidity and earning yield. The attempt to liquid staking helps to resolve the issue, by providing the token holder with the best by enjoying the PoS yield and maintaining the liquidity. The flexibility of liquid staking for depositors is one of the reasons that contributed to its success in 2022. As per the market capitalization of the liquidity-staking tokens, Ethereum tokens are trending among investors. 78% of the market share is taken by Lido Finance in the liquidity staking market.  

  • 2022: A Year For NFTs

During the first quarter of 2022, the NFT market was flourishing with high trading volumes. By May, OpenSea reached the highest with a daily trading volume of US$544 million. This was mainly carried by the “Otherdeed for Otherside” collection launch by Yuga Labs. it is the company behind the blue-chip Bored Ape Yacht Club NFTs (BAYC). Despite the soft trading volumes in the last few months, the partnerships and innovations of NFTs are ongoing. 

  • Evolution of New Projects in the Blockchain Industry

Fund invest in blockchain 2022

The investment in new projects in the blockchain industry has shown steady growth in 2022. Around twenty-nine billion US dollar has been raised in funds within the first six months of 2022 with web3 startups that includes metaverse, NFT, and blockchain funding and takes up the major part of the funding pool. The amount raised within the first six months of 2022 has already surpassed the numbers of 2021. Moreover, blockchain technology witnessed tremendous growth throughout the year with 500+ deals made in GameFi and DeFi categories. 

  • Security Issues in Blockchain Evolved in 2022

For any blockchain network, security is one of the primary concerns. However, in 2022 there have been a series of hacks and cyber attacks. Around $3.7 billion worth of crypto was hacked. Although the number is 63% less compared to the one in 2021, the weak links or errors in bridges were the major reasons behind the majority of the hacking amount. 

What Lies Ahead in the Crypto Industry?

If observed closely, we can see that none of the collapses or failures were caused by the underpinned blockchain architecture. Rather, there have been significant developments made to make the technology better and more ready for the upcoming challenges. In 2022, the Ethereum blockchain network was successful in transitioning from a proof-of-work to a Proof-of-Stake mechanism which will reduce the energy consumption of the network. The hacks and crimes in the crypto space will play a significant role in forcing the regulators to imply strict policies in the industry which will instantly build investor trust. It is important to understand the macroeconomic pressure, and the lack of regulations will keep the industry under stress. Therefore, it is important to review the crypto portfolio and make investments wisely.

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