The fall of Terra, Three Arrows Capital, and bankruptcy crises by cryptocurrency institutions saw the market into several bearish tendencies throughout Q2. The broader market stays vulnerable and tense at the moment, regardless of gradual recoveries in July. Bitcoin hovers beneath $22.9K, whereas Ethereum mounts massive momentum to steady beyond $1,600. ETH has flourished following updates of the Merge official release date.
A Quarter Not to Remember
The Q2 2022 has been disastrous for the cryptocurrency industry. Bitcoin and Ethereum recorded the worst quarterly performance in their respective history, dropping 56.5% & 67.4%, respectively. The Terra ecosystem crash triggered a domino effect in the spectrum, translating to losses amounting to billions. Moreover, the crypto winter consumed 3AC, a liquidity provider, and bankruptcy from cryptocurrency institutions like Celsius.
CryptoCompare evaluated Q2 events and their implications on the cryptocurrency market. Despite the crypto spectrum’s internal tremors, the report labeled the macro landscape ‘dire.’ The highlighted severe conditions deteriorated the digital asset sector. For now, the risk-asset market waits for the alarm of an impending recession.
The dramatic crypto market crash triggered a sharp drop in TVL (total value locked) in decentralized finance (DeFi). The value noted a 65.7% drop in this quarter. Meanwhile, the reports suggest that the ongoing bear market might welcome innovations within the spectrum, similar to the Financial Crisis of 2008. That can catalyze the next bullish run for digital assets.
CryptoCompare expects the DeFi total value locked to remain range bound as cryptocurrencies attempt recoveries from prevailing drawdown.
This quarter also witnessed cyber security and regulations activities. Janet Yellen of the US Treasury commented on crypto-related risks following the Terra crisis. The debacle saw lawsuits against Terraform and related entities. Previous reports have well-documented the current security crisis. Protocols remain in fear after DeFi exploits accounted for more than $1 billion in losses during the quarter.
The Crypto Space Status
The ongoing price bounce back is a minor rally amidst bearish markets, considering the macroeconomic condition. Market fans continue to present ambitious strategies for the market. Nevertheless, the growing tensions within the marketplace will mean severe suffering for the space. What next for the market remains a burning question for now.