A forgettable quarter
Q2, 2022 is a significant pullback for entire crypto market. Bitcoin and ETH respectively fell 56.3% and 67.4%, recording one of the worst quarterly performances in history. Terra collapse resulted in a domino effect in space, and wiped out billions of dollars. The “crypto winter” also pushed payment platform Three Arrows Capital to a dead end and crypto institutions like Celsius into insolvency.
CryptoCompare analyzed the events of Q2 and their impact on the crypto industry. Not only stopping at the internal shocks of the industry, but the big landscape is also said to be “dire” in the report. The crypto market has been taken aback by these severe market conditions. The alarm bells of a looming recession are well-anticipated.
Total Value Locked (TVL) in DeFi also suffered as the market plunged. In total, TVL fell 65.7% this quarter. However, the report claimed 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.
CryptoCompare stated:
“We expect the TVL in DeFi to continue to stay range bound as the price of crypto assets attempts to recover from the current drawdown.”
Regulations and cyber security failures were also pointed out this quarter. Janet Yelen, US Secretary of the Treasury highlighted the risks associated with the crypto space following the Terra incident. Multiple lawsuits were filed against Terraform Labs and other related entities following the collapse.
The ongoing 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.
Final words
Given the unfavorable macroeconomic situation, the current rallies are rather scarce. The industry will continue to be severely impacted by the growing tensions. At present, where the crypto market will head is still an unanswered question.
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