Bitcoin, DeFi shows surprising performance

The crypto market had another mixed quarter with NFTs losing ground and massive sell-offs while Bitcoin and DeFi are showing positive signs, as reported by CoinGecko.

Bitcoin outperformed other assets except the USD

Compared to Q2/2022, the crypto market grew by 6.5% in capitalization. Despite continued volatility in the market, Bitcoin continues to dominate other assets apart from the USD.

The world’s largest cryptocurrency has remained in a narrow range between $19,000 and $20,000 as US stocks continue to slide.

While stocks have largely been in a downtrend in recent weeks, Bitcoin ended the quarter with only a -1% change in price.

Stablecoins are also one of the big highlights in CoinGecko’s report. Key findings show a quarterly loss of $4.7 billion – QoQ decline of 3% in the market capitalization of the leading stablecoins.

In particular, the USDC incurred $9 billion in losses following the sanction against Tornado cash imposed by the United States Office of Foreign Assets Control.

BUSD, on the other hand, grew by 18% in market value. This bullish development for BUSD also corresponded with the launch of Binance’s automatic conversion of BUSD.

The failures of Terra – LUNA, Celsius, Voyager, Three Arrows Capital and a host of other cryptocurrency scams have weakened stablecoins’ credibility in the eyes of mainstream investors.

DeFi didn’t break, it came back

Headlines surrounding DeFi projects have been heavily linked to exploits since early 2022.

But data from CoinGecko’s Q3 2022 Cryptocurrency Report reveals that the third quarter saw a 31% quarter-over-quarter increase in DeFi market capitalization. Despite the disappointing performance of Ethereum after the merger and market chaos, DeFi survived impressively.

DEX shares rose 36.8% to $10.9 billion, possibly due to an increase in trading volume and volatility for floating stake protocol tokens as a result of Ethereum’s upgrade Merge.

In particular, the market value of the liquid insert industry increased to $1.54 billion. During this period, Lido, the leading liquidity provider for leveraged assets, saw its market capitalization increase by 264% to $1.60.

Despite the fact that the DeFi attack was reported to be caused by errors in the verification of validators’ messages, DeFi and its bridges have always been targets pursued by attackers. In addition, questions regarding the censorship ability of DeFi projects can pose major challenges in the longer term.

NFTs are dead?

The participation of well-known artists, musicians, celebrities and significant companies in the trading of cryptocurrency assets contributes to the increase in popularity of NFTs in 2021. Many artists have even earned millions from the sale of their work.

The community around many well-known art projects that make use of NFT technology, such as the Bored Ape Yacht Club (BAYC), has become quite robust.

This year there has been a shift in interest. Investors stay away from the NFT industry for a variety of reasons, including the following: ignorance of the community; corporate failure; the potential for network attacks even against large enterprises such as Axie Infinity; and the risk of legal consequences.

According to data from the report, the NFT (non-fungible token) market recorded a significant decline, as there was only $2.1 billion in total trading volume across the top 5 NFT marketplaces, OpenSea, Magic Eden, LooksRare, X2Y2 and CryptoPunks, down. 77% compared to the previous quarter.

One of the reasons for this decline is that interest rates have risen steadily in recent years. This has made capital flows less interested in placing large risky bets on NFT, which is one of the asset classes with the highest degree of speculation.

The crypto community assumes that the Fed will maintain the course with gradual rate hikes in the upcoming meetings.

The central bank’s easing of monetary policy came to a halt, and investors reacted by shifting their focus to much safer groups. A significant proportion of NFT owners have observed a sharp decline in the value of their holdings.