Despite gradually recovering in July, the school market is still tense and vulnerable. Bitcoin is trading above $22,000 while ETH surges to $1,600 following the news of the Merge release date.
Q2 2022 was a disaster for the crypto space. Bitcoin and ETH fell 56.3% and 67.4%, respectively, recording one of the worst quarterly performances in history. The collapse of the Terra ecosystem resulted in a domino effect across space, causing billions of dollars in damage.
The cold “crypto winter” also pushed liquidity provider Three Arrows Capital to a standstill and crypto institutions like Celsius into insolvency.
CryptoCompare analyzed the events of Q2 and their impact on the industry. Not only stopping at the internal shocks of the industry but the macro context is also said to be “catastrophic” in the report.
The cryptocurrency market became highly fearful of these extreme market conditions. Accordingly, there is no shortage of warning bells about the impending recession in the risk asset space.
The cryptocurrency market plummeted, leading to a drop in Total Value Locked (TVL) in DeFi. In total, TVL fell 65.7% this quarter. However, the report claims the bear market can bring a lot of innovation in the space, akin to the 2008 Financial Crisis, which could be the catalyst for the next bull run in the industry.
Cybersecurity regulations and bugs were also pointed out this quarter. Janet Yellen, US Secretary of the Treasury, highlighted the risks associated with space following the Terra incident. Following the collapse, multiple lawsuits were filed against Terraform Labs and other related organizations.
The current security crisis has also been well documented in previous reports. In Q2, over $1 billion was stolen through DeFi mining attacks and continues to threaten many other protocols.
Given the unfavorable macroeconomic situation, the bear market’s current rallies are relatively modest. Still, enthusiasts continue to come up with ambitious plans for crypto.
But, the industry will continue to be severely impacted by the growing tensions in the market. For now, where the industry will go remains a trillion-dollar question.
DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.
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