Crypto Market
In November 2021, the cryptocurrency market reached an all-time high of $3 trillion. It is always a challenge to place a stake in the ground for such a young and volatile market, however. The second quarter of 2022 has seen some significant losses: Bitcoin, for example, lost 55% since its high of $69,000 in November 2021. The market is shaken by the collapse of Terra, the second-largest DeFi ecosystem. Estimates suggest that over $60 billion was lost in LUNA and UST alone, having represented the 7th and 10th largest tokens by market cap, respectively.
Such expansion and contraction of the sector is, of course, to be anticipated. In 2017, the first major crypto expansion phase was fueled by the ICO boom that occurred against a background of thriving tech and digital stocks. Yet, by February 2018, Bitcoin lost 65% of its 2017 value. Reminiscent of the dot com crash, an estimated 90% of the projects conceived during the ICO era failed less than six months after launch. However, note that those that survived include major players such as Decentraland and Enjin, which successfully launched on their ICOs.
As is to be expected, a recovery occurred, which was then derailed by the COVID liquidity crunch in the first quarter of 2020. Despite all these challenges within the market, there are lessons to be learned by paying attention to the builders in the space. Ethereum, for example, has met some vital milestones in this crypto "winter"; while Web3 ecosystems such as Axie Infinity launched into such a market with stratospheric success. Similarly, thanks to the maturation of the dApps that were being built, DeFi has expanded significantly thanks to the likes of Curve, MakerDAO, and Uniswap.
Thanks to the current policy of the US, in which 80% of all the USD ever issued has been released in the last two years, investors are understandably concerned and seek alternatives in DeFi. Therefore, despite the volatility of the ecosystem, it is apparent that investors seek the anti-inflationary policies that a well-defined DeFi ecosystem can provide. Backing this assertion, and thanks to the implementation of multichain, is the fact that blockchains like Polygon and Avalanche have nurtured successful DeFi ecosystems with billions in value locked.
In fact, crypto is mainstreaming quickly. For example, Mastercard announced its partnership with three Asia-based crypto companies to launch crypto-linked credit, debit, and prepaid cards. These will simplify how users convert their digital assets into fiat currency. Current predictions suggest that by 2030 the total crypto market cap figure could increase to about $250 trillion.
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