DeFi activity is shrinking while BTC and ETH prices fall. However, the NFT market has been growing faster than ever.

According to Footprint Analytics, DeFi’s TVL failed to break the $300 billion mark, instead the market fell to $204.79 billion, losing 22% of its value month-on-month. BTC and ETH continued to tumble, while trading volume in the NFT market hit a new January high, up 239%.

BTC and ETH collapse, major protocols liquidated $425 million

BTC price fell 17.3% from $46,472 to $38,430 in January ETH fell 27.4% from $3,695.6 to $2,684.75 with the highest daily trading volume for the month of $29.31 billion. USD.

On the 22nd, the duo BTC and ETH marked their lowest levels since September 2021.

The price drop was mainly influenced by policy announcements from various countries, including the tightening of monetary policy by the Federal Reserve, the Central Bank of Russia’s proposal to ban the use of cryptocurrencies, Pakistan’s ban on cryptocurrencies, and other countries’ strict bans on regulation of BTC, dated mining and trading to online advertising.

BTC Price & Volume | Source: Footprint Analytics

ETH Price & Volume | Source: Footprint Analytics

As the price of BTC and ETH fell, leading lending protocols like AAVE, Compound, and MakerDAO triggered massive liquidations around January 7th and 21st, with $425 million disappearing from the market.

Amount of BTC liquidated across protocols | Source: Footprint Analytics

Amount of ETH liquidated across protocols | Source: Footprint Analytics

The total value of locked assets (TVL) on DeFi is down 22% compared to the previous month

Due to the overall crypto market decline, TVL fell 22% in January from $264.22 billion to $204.79 billion month-on-month. TVL of bridge projects increased by 30% but did not contribute much to overall DeFi TVL increase as this ratio is too small.

TVL on the DeFi market | Source: Footprint Analytics

TVL market share in DeFi market | Source: Footprint Analytics

TVL on the Fantom blockchain hits record highs

Blockchains are all competitive and each has its own way of conquering the market. In January, Terra TVL overtook BSC for second place. However, by the end of the month, BSC rebounded to second place.

TVL on Binance, Terra, Fantom | Source: Footprint Analytics

Fantom’s TVL hit ATH on Jan. 25, hitting $8.9 billion with a 93% growth rate, outperforming Avalanche ($8.62 billion), Solana ($8.07 billion), and Polygon ( $4.67 billion) and reached the top 4.

Market Share of TVL on Blockchains | Source: Footprint Analytics

Reasons for Fantoms to reach TVL, ATH:

• Fantom is an alternative that is faster (1-2 seconds per transaction) and much cheaper (around $1 for 10 million transactions) than Ethereum.
• Fantom has a rich ecosystem with farming, DEX, and credit projects accounting for more than 23% of the ecosystem, with Scream and SpookySwap contributing the most growth in TVL.
• Scream supports depositing and lending WBTC, WETH, WFTM, DAI, USDC, fUSDT for more liquidity.
• SpookySwap offers over 100% APY to attract more users.

The curve is still on the rise

Curve is TVL’s premier DeFi platform focused on trading stablecoins. The decline in BTC price sent other cryptocurrencies like ETH down, but had relatively little impact on the prices of stablecoins like USDT and USDC.

The top 5 TVL positions are famous projects like Maker DAO, AAVE and Convex Finance.

TVL of DeFi protocols | Source: Footprint Analytics

Monthly NFT usage volume hits record high of $8.52 billion, up 239%

As the token price has fallen due to the regulatory environment, speculative capital has flowed into NFT collections, games and art. This has led to strong activity in the NFT space, with trading volume hitting a new high of $8.52 billion.

Monthly Trading Volume of NFT Market | Source: Footprint Analytics

Meebits saw a spike in transactions ranging from $200 million to $350 million between Jan. 11 and Jan. 21. Meebits is a 3D virtual world game created by Larva Labs, the Cryptopunks development team. The second most traded NFT project is Terraforms and the third most traded project is Loot.

Top 10 NFT projects by trading volume in January | Source: Footprint Analytics

Popular NFT collectibles such as Bored Ape Yacht Club, Cryptopunks, Art Blocks, and Axie Infinity have relatively stable daily trading volumes.

Monthly investment volume down 38% month-on-month

The number of investments in January fell by 55% compared to the previous month, and the amount invested fell by 38%. By investment sector, DeFi saw the smallest decline compared to December, while NFT and Web3 saw the highest declines of 66% and 70%, respectively.

Monthly Investment Trends | Source: Footprint Analytics

Monthly Investment Trends by Category | Source: Footprint Analytics

Conclude

Influenced by new proposals, regulations and policies, the crypto market went into recession in January. Mainstream cryptocurrency prices fell, with BTC and ETH hitting their lowest lows since September 2021. DeFi’s TVL is down 21% mom, showing a strong correlation with the largest tokens.

However, the decline in ETH price contributed to NFT trading, which resulted in speculative capital flowing into the NFT market and flowing into collections, art, and gaming.

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