In January 2023, ViaBTC Capital and CoinEx jointly released the 2022 Annual Report to provide data analysis and insights across nine sectors, including: Bitcoin Ethereum stablecoins NFT public networks DeFi SocialFi GameFi regulatory policies. This report also predicts the trend of cryptocurrencies in 2023.
As per the report, affected by factors such as the macro environment and the transition from bullish to bearish, the entire cryptocurrency industry turned bearish on 2022. After the Earth collapse in May, most cryptocurrency sectors were hit by the impact of low. Below is the overview of each segment.
Table of Contents
Bitcoin
In 2022, Bitcoin’s overall performance remained sluggish, with significant drops in price and trading volume compared to 2021. The price at the end of 2022 even dropped below the peak of the last bull market. Bitcoin’s price trend over the year is obviously influenced by the pace of US interest rate increases, but as they continue to advance, their impact on the coin’s price gradually diminishes. Regarding BTC mining, the network difficulty has remained at an all-time high. Meanwhile, mining income plummeted and miners had to retire their old models. Affected by multiple factors, the mining industry experienced a strong crowding-out effect, which pushed owners of small mining farms out of the market for various reasons. At the same time, long-established mining pools and mining farms have managed to maintain a certain level of stability.
Ethereum
Ethereum’s primary stats are trending downwards in 2022. In addition to secondary market price and trading volume, on-chain data including TVL, transaction cost, active addresses and burn volume also plummeted. Despite this, the network has made a lot of progress in 2022. On September 15, Ethereum completed the historic transition from PoW to PoS. The merge significantly reduced grid energy consumption and daily production, thereby reducing dumping pressure from secondary markets. Meanwhile, Tier 2 projects such as Arbitrum, Optimism, zkSync, and Starknet have all or partially released their mainnet. Although its daily transaction volume was much lower than the Ethereum mainnet, the projects exceeded Ethereum in terms of the number of addresses. Also, its gas fee was usually 1/40 of that charged for Ethereum. At the same time, the network also saw an exponential increase in gas rates during 2022.
stablecoins
The stablecoin market as a whole was flat in 2022. Specifically, over the year, stablecoin supply dropped from $157 billion to $148 billion, a 6% drop. In this sense, the drop was not substantial. As for centralized stablecoins, USDT has maintained its dominance, while Binance’s BUSD is growing rapidly. On the other hand, algorithmic stablecoins were hit hard by the LUNA crash, which shattered faith in decentralized stablecoins and reduced trading volumes. As a result, there has been a clear drop in the number of new decentralized stablecoins.
Public Networks
Despite difficult market conditions in 2022, public networks remained a competitive sector. Due to the surge in demand caused by congestion on the Ethereum network, the new public network with low fees maintained a brilliant performance prior to May. However, as various bad news brewed, a series of bankruptcies followed one another. Many public networks were heavily impacted, and the decline was even worse than Ethereum. In May, Earth collapsed in just a few days, becoming the first known public grid to go down. Furthermore, the collapse of the Earth was a signal that the market was completely bearish. In November, hit by the fall of FTX and Alameda Research, the price of the Solana token and its TVL fell again, and projects within its ecosystem were also affected. Other new networks like Fantom and Avalanche were also struggling. At the same time, several new public networks, including Tier 2 projects like Arbitrum and Optimism and Meta-related networks like Aptos and Sui, made their debut in 2022.
Last year, the NFT sector declined after its initial boom. In April, the NFT market cap reached US$4.15 billion, an all-time high; in May, fueled by the boom of Otherside, a metaverse NFT collection developed by Yuga Labs, the industry’s transaction volume reached a record $3.668 billion. But soon after, when the NFT market became sluggish, the trading volume decreased. Meanwhile, the price of blue-chip NFTs, as well as the price of ETH, plummeted, which negatively affected the market. On the other hand, the number of NFT holders continued to grow and reached a record high in December.
DeFi
DeFi TVL also trended downwards in 2022. During the LUNA/UST meltdown in May, mainstream currencies witnessed the most spectacular crash in cryptocurrency history, followed by the collapse of TVL. Furthermore, throughout the year, DeFi also suffered from frequent hacks, which raised security concerns. In terms of innovation, although the first two quarters of 2022 saw trends about DeFi 2.0 from time to time, along with the OHM drop and the (3, 3) meme, DeFi 2.0 almost proved to be a completely false narrative, and the market has turned its attention to DeFi 1.0 infrastructure projects such as Uniswap, Aave and MakerDAO. Despite the bearish conditions, major DeFi projects including AAVE and Compound managed to maintain stable operations and attracted many new users of certain CeFi projects (such as Celsius and FTX).
SocialFi
In 2022, the blockchain industry continued to explore new possibilities for SocialFi. Over the year, we saw the emergence of iconic terms such as Fan Token, Soulbound Token (SBT), Web3 Social and Decentralized Identity (DID), but PMF (Product-Market Fit) was never identified. Despite this, SocialFi still managed to introduce us to a number of famous projects, including the STEPN lifestyle Web3 app with SocialFi elements, the Galxe credential network, the BNB Chain SPACE ID domain name service, the Lens Protocol social graph, and the Gamified social learning Web3 Hooked Protocol. In addition, the 2022 Qatar World Cup also helped Fan Tokens to attract great attention from the market. As a result, instead of plummeting due to the impact of the downturn, Fan Tokens also performed slightly better in 2022 than they did in 2021.
The year 2022 was also the start of the GameFi slump. There has been no significant innovation in the P2E blockchain game model. As user growth and trading volumes have slowed, institutional investors have looked away from the P2E model. In the first half of the year, the Move-2-Earn model created by STEPN captured the spotlight with its innovative dual approach of tokenomics and marketing, bringing a new dynamic to GameFi. Last year, blockchain projects raised the most funds in April, with blockchain investments totaling $6.62 billion. However, the market has not responded to other project teams focusing on the more token reality model. As the multi-chain ecosystem gained increasing popularity, Ethereum maintained its dominance in the GameFi ecosystem, but the growth rate of projects on the network failed to match that of BNB Chain and Polygon. Furthermore, most networks relied heavily on their core projects and there were still many low-quality GameFi initiatives with a small user base, below average interactions and low trading volumes.
Regulatory Policies
Overall, for the cryptocurrency industry, 2022 has been full of ups and downs, but regulations are moving in the right direction. In the last year, regulators have achieved a lot of progress. The United States launched a regulatory framework for cryptocurrencies; the European Union initially passed the MiCA Act and the TFR Act; the United Kingdom and South Korea made progress in establishing the relevant organizations; Russia and Hong Kong promoted the discussion and implementation of policies for cryptocurrency mining and virtual asset securities. The turmoil that befell the cryptocurrency industry in 2022 was partially a result of sharply falling funds and partially a result of regulatory loopholes and crackdowns. Last year, the bankruptcy of Terra and FTX, two of the leading cryptocurrency projects, prompted regulators and law enforcement agencies to further enhance cryptocurrency oversight and investigations.
For more details, visit the ViaBTC Capital website via the link: https://capital.viabtc.com/blog/ViaBTC-Capital:-2022-Review-and-2023-Forecast-in-Crypto-Industry-193?category =0&lang=en_US
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