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Q2 2022 Cryptocurrency Report Highlights Terra’s Collapse and Capital Exiting the Crypto Ecosystem

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On July 13, Coingecko, a specialized web portal dedicated to tracking prices, volumes, and market capitalization of cryptocurrencies, published the “2022 Q2 Cryptocurrency Report”, which discusses the actions and conclusions of the crypto market over the last quarter. The 46-page report explains how the effects of Terra UST and LUNA have crippled the entire crypto ecosystem and stablecoin economy. Moreover, Coingecko researchers say that “the decline in stablecoin market share suggests that a certain amount of capital has completely exited the crypto ecosystem.”

Coingecko data suggests investors exited stablecoins in the second quarter rather than reducing risk in them

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Coingecko has published the company’s cryptocurrency for the second quarter report for 2022 as there have been a number of significant changes over the past three months. A study published last Wednesday notes that the second quarter of 2022 was “saturated with many unpleasant events in the crypto space.”

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Q2 2022 Cryptocurrency Report Highlights Terra’s Crash and Capital Exodus from the Crypto Ecosystem

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The crypto firm’s report explains that while trading volumes in the spot market remained stable at $100 billion per day, “the top 30 coins lost more than half of their market capitalization compared to the previous quarter.” Most of the errors in crypto started with the domino effect caused by the collapse of Terra UST and LUNA.

Coingeco elaborates that shortly before the fall of UST, the stablecoin was the third largest fiat-based token in existence, with $18 billion erased in just a few days. The report notes that BUSD managed to become the third largest stablecoin. Aside from UST Terra, other stablecoin assets have suffered in valuation, and Coingecko analysts suspect that a certain amount of funds have left the crypto economy. The researcher’s study for the second quarter of 2022 states:

The slight decline (excluding UST) in stablecoin market share suggests that a certain amount of capital has completely exited the crypto ecosystem, unlike last quarter when investors likely switched to stablecoins due to market uncertainty.

Terra and 3AC Fallouts are spreading, Defi’s market cap is falling

The 46-page report also explains how Lido’s bond holdings were impacted by the Terra explosion and the demise of cryptocurrency hedge fund Three Arrows Capital (3AC). One particular chart featured in the study shows how 3AC’s financial woes have directly or indirectly affected at least 12 different crypto companies.

Q2 2022 Cryptocurrency Report Highlights Terra’s Crash and Capital Exodus from the Crypto Ecosystem

Decentralized finance (defi) has also been affected, as the authors of Coingecko say: “Due to third-order effects, defi protocols such as Maple Finance were not spared as some user funds were lent to Orthogonal Trading, who in turn moved to Babel Finance , one of 3AC’s creditors.”

Q2 2022 Cryptocurrency Report Highlights Terra’s Crash and Capital Exodus from the Crypto Ecosystem

Defi itself was hit hard, and data from Coingecko shows that defi’s market capitalization has fallen from “$142 billion to $36 billion in 3 months.” The report again states that much of defi’s value was “wiped out largely due to the collapse of Terra and its UST stablecoin.”

Coingeco’s research covers a wide range of issues related to cryptocurrencies in the second quarter of 2022 and touches on topics such as the loss of pegging of other stablecoins, decentralized exchange (dex) trading volumes, non-fungible tokens (NFTs) and NFT markets. While there was a lot of action in the second quarter, Koingeco’s report highlights that much of this period has been bearish and gloomy.

What do you think of the Coingecko report and the action recorded in the second quarter of 2022? Let us know what you think about it in the comments section below.

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Credit : news.bitcoin.com

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