On July 13, the dedicated crypto price tracking, volume, and market capitalization web portal Coingecko published the company’s “Q2 2022 Cryptocurrency Report” which discusses the last quarter’s crypto market action and insights. The 46-page report explains how the Terra UST and LUNA fallout wreaked havoc on the entire crypto ecosystem and the stablecoin economy. Moreover, Coingecko researchers say “a decrease in the stablecoin market share suggests that a certain amount of capital has completely exited the crypto ecosystem.”
Coingecko data suggests Q2 investors exited stablecoins rather than de-risk them
Coingecko has released the company’s second quarter cryptocurrency report for 2022 as there have been a number of significant changes over the past three months. The study, published last Wednesday, notes that the second quarter of 2022 was “filled with many unfortunate events in the crypto space.”
The crypto firm’s report explains that while spot market trade volumes have remained steady at $100 billion daily, “the top 30 coins have lost over half their market cap since the previous quarter.” Much of the crypto blunder started from a domino effect caused by the Terra UST and LUNA collapse.
Coingecko details that just before the fall of the UST, the stablecoin was the third largest fiat token in existence, and $18 billion was wiped out in just a few days. The report notes that BUSD has managed to become the third largest stablecoin. Apart from Terra’s UST, other stable assets have seen their valuations suffer and analysts at Coingecko suspect that a specific amount of funds has left the crypto economy. The researcher’s study from the second quarter of 2022 says:
The slight decrease (discounting UST) in stablecoin market share suggests that a certain amount of capital has completely exited the crypto ecosystem, in contrast to last quarter when investors likely de-risked into stables amidst market uncertainty.
Spread of Terra and 3AC spinoffs, Defi market cap plummets
The 46-page report further explains how Lido’s bond assets were affected by the Terra explosion and the demise of crypto hedge fund Three Arrows Capital (3AC). A specific chart shared in the study shows how 3AC’s financial troubles have directly or indirectly affected at least 12 different crypto companies.
Decentralized finance (defi) was also hit, as Coingecko’s authors say “Due to third-order effects, defi protocols such as Maple Finance were not spared as some users’ funds were lent to Orthogonal Trading, which in turn had gone to Babel Finance, one of 3AC’s creditors.”
Defi itself has suffered a lot and data from Coingecko shows that defi’s market capitalization has fallen from “$142 billion to $36 billion in the space of 3 months”. The report again states that much of defi’s value has been “wiped out largely due to the collapse of Terra and its stablecoin, UST.”
Coingecko’s study covers a wide variety of subjects that pertain to Q2 2022’s crypto action and touches on topics like other stablecoins losing their peg, decentralized exchange (dex) trade volumes, non-fungible tokens (NFTs), and NFT marketplaces. While the second quarter saw a lot of action, Coingecko’s report highlights how most of it has been bearish and gloomy.
