2022 Global Cryptocurrency Market: Shrunk by more than half, down about 64.51%

According to statistics from CoinMarketCap, as of January 1, 2023, there are 22,163 cryptocurrencies in the global cryptocurrency market, with a total market capitalization of approximately US$798.688 billion. Compared with the total market capitalization of about US$2,250.254 billion on January 1, 2022, the entire digital currency market has dropped by US$1,451.566 billion, a year-on-year decrease of approximately 64.51%.

1. Overview of the digital currency market in 2022

Specifically, the highest point of the total market capitalization of the cryptocurrency market in 2022 was on January 3, which was approximately US$2,259.856 billion; the lowest point was on November 22, which was approximately US$781.547 billion, and the difference between the two points was approximately US$1,478.309 billion.

From the perspective of the overall trend, at the beginning of the year, due to the “Russia-Ukraine conflict” that started on February 24 and the Federal Reserve’s announcement of raising interest rates for the first time in two years in the early morning of March 17, the market experienced two relatively large downturns, but in the end The market can once again pull back to the market value level of about 2 trillion US dollars.

Until April, the cryptocurrency market was affected by multiple interest rate hikes in the U.S. stock market and the decoupling event of the Terra algorithm stablecoin in May. It started a continuous downward trend and gradually stabilized in July. At this time, the market value of the encryption market has fallen to around $1 trillion, a drop of around 50% from the beginning of the year.

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In November, affected by the collapse of the centralized exchange FTX and a series of subsequent events triggered by it, the market started a downward trend again. In December, another major centralized exchange, Binance, once again fell into a regulatory crisis, causing market panic to continue to spread. As of the end of 2022, the total market value of the encryption market has fallen below 800 billion US dollars, and it is still declining slightly.

2. Annual trend review of mainstream encrypted assets (price vs trading volume)

Bitcoin rose above $68,000 in one fell swoop in November 2021, reaching its highest price ever. However, after entering 2022, Bitcoin did not rise above $70,000 as expected, and fell below $50,000 at the beginning of the year alone, a drop of nearly 30%. In 2022, the highest price of Bitcoin for the year is $47,686.81 (January 2), and the lowest is $15,782.16 (November 22).

During the period from January to April 2022, the price of Bitcoin continued to fluctuate, and after many consolidations, it finally failed to break through $48,000 again. Among them, the “Russian-Ukrainian conflict” incident that broke out on February 24 directly caused the price of Bitcoin to fall below the $35,000 mark on that day, setting a new price low since July 2021.

In May, due to the outbreak of the Terra incident, panic struck, Bitcoin began a cliff-like decline, and the price retreated to around $38,000 in one fell swoop. In June, Bitcoin ushered in another sharp drop. Within a month, the price of Bitcoin fell from $30,000 to around $19,000, which intensified the panic in July.

In November, due to the impact of a series of events such as the bankruptcy of FTX, Bitcoin ushered in a small drop again. It can also be seen from the above figure that Bitcoin has seen a surge in transaction volume when it falls.

Judging from the situation at the end of 2022, the impact of FTX’s bankruptcy is still penetrating, and large encryption institutions including Genisis under Grayscale have been affected to varying degrees. At the same time, Binance has also been pegged by U.S. regulators, and other crypto institutions and exchanges have not made any major moves. Therefore, the price of Bitcoin may only usher in new opportunities again at the next “halving”.

For Ethereum, the biggest event of the year was the successful completion of the merger. At 14:42 on September 15th, Beijing time, the execution layer of Ethereum (i.e., the previous main network) and the consensus layer of Proof of Stake (i.e., the beacon chain) triggered the merger mechanism at block height 15537393 and produced the first PoS block (The height is 15537394), since then the Ethereum consensus has officially changed from PoW to PoS mechanism.

However, this did not give the Ethereum price much upside. As you can see from the chart above, Ethereum price moves in roughly the same direction as Bitcoin. Ethereum ushered in the highest price of the year at the beginning of the year, which was US$3,829.57, and fell to US$1,038.19 in mid-July, the lowest price of the year. The difference between the two was US$2,791.38, a drop of nearly 73%. Likewise, Ethereum transaction volumes have surged in parallel with the drop in price. At press time, Ethereum price is hovering around the $1,200 range.

It has to be admitted that the merger of Ethereum officially opened a new encryption track. As the leading currency representing PoS, Ethereum will usher in many key milestones such as the Shanghai upgrade in 2023, which is worth looking forward to. Among them, the nearest Shanghai upgrade will take place in March 2023, when ETH withdrawals pledged by the beacon chain will be released.

In addition, the “public chain war” of Ethereum layer2 is still in full swing. At the end of this year, the zkSync 2.0 mainnet was officially launched, and its ecosystem is also expanding rapidly. And according to zkSync’s roadmap, there will be milestone events in the first two quarters of 2023. Optimism, one of the leading layer2 projects, is also growing rapidly. Although the project had 20 million OPs stolen due to operational errors in June, this did not affect its ecological development. According to data released by The Block, the recent transaction volume of Optimism and Arbitrum has continued to rise, and reached a peak in September. In terms of market share, Arbitrum currently has the highest TVL among all Layer 2 Protocols, accounting for 50% of the market share; according to L2Beat data, Optimism’s market share is about 30%. It is expected that the market share of layer 2 will be re-divided early next year. 

The price trend of BNB this year was still accompanied by the ups and downs of the price trend of Bitcoin at the beginning of the year.

Binance currently sits firmly on the Top 1 chair of the centralized exchange, but is being watched by regulators. In addition, in October this year, BNB Chain was hacked, involving a total amount of more than 850 million U.S. dollars, making it the largest hacking incident on Web3 so far. In mid-December, Binance’s audit firm, Mazars, “severed ties” with it, triggering a wave of billions of dollars in withdrawals. People began to worry that Binance would be the next FTX, which also caused the price of BNB to fall again. At present, it is difficult for the price of BNB to rise significantly in early 2023.

Despite this, Binance continues to expand its business territory globally this year. On November 30, Binance Capital acquired Japanese crypto asset brokerage Sakura Exchange Bitcoin (SEBC). Meanwhile, Binance increased its stake to nearly 100% after acquiring Indonesian exchange Tokocrypto. In addition, Binance also spent $1.022 billion to acquire the assets of Voyager Digital, an encrypted asset lending service provider. The biggest event surrounding Binance this year is its entanglement with FTX. For details, please pay attention to this annual report “Chapter 3: The CEX Market Under the Ups and Downs: From Bankruptcy to the Shadow of the Black Swan”.

As the originator of the application chain, Polkadot took off rapidly with the help of the bull market in 2020, and attracted a large number of developers with its perfect development technology and rich ecology. However, its development momentum seems to be short-lived. The price of its native token DOT in 2022 The same goes for trends. At the beginning of the year, the price of Polkadot rose as high as $30.11, but by the end of the year, the price of DOT fluctuated all the way down to around $4.5, a drop of more than 85%.

From the current point of view, the overall progress of projects in the Polkadot ecosystem is not as good as expected, and Polkadot is not so special that these applications must be it. In addition, Polkadot only supports up to 100 parachains, which dissuades potential developers from coming in. On October 21, Polkadot co-founder Gavin Wood issued a statement stating that he would resign as CEO of Parity Technologies, the Polkadot ecological development organization. Without the leadership of this spiritual leader, Polkadot’s future path may be even more difficult.

In 2022, the price of ADA will reach a maximum of $1.59 and a minimum of $0.3045. Affected by the general environment of the encryption market, ADA as a whole still shows a downward trend.

As a cross-chain duo, Cosmos was launched earlier than Polkadot, but the progress was once slower than the latter. But the current market expectations for Cosmos are higher than Polkadot. First of all, Cosmos has accumulated great advantages in technology. The Cosmos SDK can quickly develop blockchains, the IBC cross-chain protocol can connect across chains without permission, and the Tendermint consensus protocol is the first BFT (Byzantine Fault Tolerant) consensus protocol available at the Internet level.

Second, Cosmos has the opportunity to take advantage of the large number of assets deposited in the ecosystem (especially after Terra). The idea of ​​the Cosmos 2.0 proposal draws on Polkadot, so that the application-specific chain can partly share the security of the Cosmos Hub and pay its own native tokens, so that validators who pledge ATOM on the Cosmos Hub can have higher returns and indirectly increase ATOM. value. In the long run, Cosmos still has good development prospects.

As a public chain supported by FTX, Solana was once favored by the market. The project has a good momentum of development in early 2022, and the price of SOL rose to a maximum of $178.52 at the beginning of the year. However, affected by the collapse of FTX, the price of SOL ushered in a sharp drop in November, and most players chose to flee, resulting in a surge in trading volume. As of the time of writing, the price of SOL has dropped to around $11, which is more than 16 times lower than the highest price in the whole year.

Terra ushered in a boom in April this year. The deposit application Anchor provided a 20% annualized deposit rate for its algorithmic stablecoin UST, which made the market value of UST and LUNA soar to 40 billion US dollars, and the market value of LUNA also rushed to Top five cryptocurrencies by market capitalization. In order to maintain the stability of UST, the LUNA Foundation also purchased 42,000 bitcoins as reserves that month, becoming the seventh largest holder of bitcoins in the world. By all indications, Terra seems to be on the verge of becoming the most successful algorithmic stablecoin project. However, it turns out that this is just a flashback.

On May 8, due to capital siege and debt crisis, UST experienced a serious unanchor event. Panic struck, the FUD sentiment on Twitter intensified, and people began to frantically sell UST and LUNA in their hands. Terra’s dual currency model fell into a “death spiral”. Although Terra founder Do Kwon and the Luna Foundation continued to take rescue measures, they failed to prevent this incident from turning into a huge disaster.

In less than a week, the price of UST dropped from $1 to around $0.1 at the speed of light. At the same time, the price of LUNA also dropped from about $70 to $0.000000999967. Although Terra re-released LUNA at the end of May, because the project was still in deep crisis, the price and transaction volume of LUNA only experienced a large increase in September, and then entered a downward trend again. After re-launch, the highest price of LUNA was $8.88, and the lowest was only $1.49.

The crash of Terra not only wiped out almost all ecological projects, but also had a comprehensive impact on the industry. The market has fallen sharply, user panic has intensified, and liquidity is facing drying up. Hedge fund Three Arrows Capital, lending platform Celsius, Canadian listed company Voyager Digital, cryptocurrency trading and lending platform BlockFi, and cryptocurrency management fund Babel Finance have gone bankrupt to varying degrees , delisting or restructuring. Encryption exchanges AEX, Hoo, etc. have stopped all trading services. At present, the South Korean court is still investigating the project, and the whereabouts of Do Kwon, the founder of Terra, is still unknown.

FTX has occupied a place in the centralized exchange market with its derivatives trading, and its momentum is catching up with Binance. As its platform currency, FTT was also favored by people at the beginning of the year, which made the price of FTT reach the highest point of nearly $52 in April. At the same time, the total market capitalization of FTT has also continued to rise. Since February, it has entered the top 30 list of cryptocurrency market capitalization, ranking the highest at 21st.

Until the arrival of November, FTX and its encryption agency Alameda Research first fell into a crisis of unknown debts, and then quickly went bankrupt due to debts, bank runs, and a large number of FTT sell-offs. The price of FTT ushered in a sharp drop on November 7, quickly falling from $22 to around $3, and its trading volume surged to above $3.3 billion on the same day. As of December 31, FTT had fallen to $0.84.

At present, the incidents surrounding the bankruptcy of FTX and the arrest and imprisonment of its former CEO SBF are still fermenting.

As a currency that Tesla and Twitter CEO Elon Musk is very optimistic about, DOGE will firmly occupy the throne of the top 6 cryptocurrency market capitalization in 2022. Although the price of DOGE will not break through $0.2 in 2022, this will not affect the increase in its market value and trading volume. Especially at the end of October, after Musk completed the acquisition of Twitter, the price and trading volume of DOGE ushered in a sharp rise, the highest rose to 0.1656 US dollars, faintly surpassing the momentum at the beginning of the year. Then, affected by the market at the end of the year, the price of DOGE has retreated to around $0.07.

As another well-known MEME currency, SHIB’s performance in 2022 is relatively stable, basically adjusting with the market, and there is no special rise or fall. The highest price of SHIB throughout the year is $0.00003414, and the lowest is $0.000007721.

3. Review of Top 30 Cryptocurrencies by Market Value in 2022 

As shown in the figure above, in terms of market value rankings, in addition to BTC and ETH ranking first and second, BNB’s market value ranking rushed to third place in January, and it remained within the Top 5 throughout the year.

Throughout the year, public chains and stablecoins still dominate. Among them, in the public chain part, LUNA has dropped out of the TOP 30 list since June due to the Terra thunderstorm; SOL has dropped in December due to the FTX bankruptcy event. In terms of stablecoins, USDT is still the centralized stablecoin with the largest market capitalization, followed by USDC and BUSD; the algorithmic stablecoin UST and LUNA have disappeared from the TOP 30 list; DAI is the only decentralized currency whose market capitalization enters the top 30 stablecoins.

In addition, unlike 2021, there are not many tokens in the DeFi and NFT fields in this year’s TOP 30. Only in January, due to the impact of the NFT boom in 2021, the MANA token rushed to the 30th place. It rose to No. 29 in February before falling off the list.

The market capitalization rankings of the two major MEME currencies, DOGE and SHIB, have not changed much.

The following are the TOP 30 coins and their market value proportions in each month:

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