Welcome to CoinSmart’s Q2, 2022 crypto market review. Previously, we published our Q1, 2022 crypto market review, which you can read here. Let’s start by looking at the crypto marketcap for the quarter.
As you can see, Q2 was pretty devastating for the market. The overall market cap has dropped by a staggering 57.25%, from $2.186T to $934B! Of course, the main reason behind this collapse was the crypto contagion which sank companies like Terra and Three Arrows Capital (3AC). Our CEO Justin Hartzman already discussed both the debacles at length. You can check them out here:
Let’s see how some of the major coins did during the quarter.
Bitcoin Q2, 2022 Analysis
BTC/USD has been on a steady downward trend during Q2. During this three-month period, bitcoin fell from $47,160 to $19,870. During this staggering fall, BTC broke below several crucial psychological levels ($40,000, $30,000, and $20,000).
Bitcoin metrics and on-chain analysis
Here are some interesting stats to note about Bitcoin.
Image credit: Into The Block
The chart above shows that the number of new addresses entering the Bitcoin network has been relatively stable, despite a bearish market. This is a very positive sign.
Image credit: Into The Block
The image above shows the total number of addresses that held some BTC. This number has gone up from 40.49 million to 41.49 million. So, total addresses holding BTC have jumped by a million in the middle of the bear market. Interestingly, you can see a dip between May 13 and May 17, wherein these addresses dropped from 41.4 million to 40.98 million. This dip in addresses happened just a day after the Terra crash.
Many miners were forced to switch off their rigs since they simply weren’t making enough money to break even. Because of this, there has been no significant rise in network hashrate. Hashrate is indicative of total miner activity. They are both directly related to each other. Lower miner activity equals low hashrate, and vice-versa.
Ethereum Q2, 2022 Analysis
During Q2, the Ethereum price fell from $3,285 to $1,068 – a 67.50% drop. For our Etheruem analysis, the first thing that we will be looking at is the state of its DeFi ecosystem.
So, as we can see, Ethereum’s DeFi has taken quite a beating. The overall TVL (total value locked) has dropped from $81.3 billion to $31.72b during Q2. This doesn’t necessarily surprise us since both the UST and stETH depegging harmed Ethereum’s DeFi.
NFTs also suffered significantly during this period. In June, the total Ethereum NFT trades dropped by 55% from the previous month. Total trade volume fell from $2.6 billion to about $672 million.
Ethereum metrics and on-chain analysis
Let’s start by looking at the total ETH staked on the beacon chain.
Image Credit: Into The Block
During Q2, the total ETH staked on the beacon chain went up from 11 million to 13 million. So, users staked 2 million ETH during these three months.
Ethereum often gets criticized for its bloated gas fees. Let’s see how it did in Q2.
Image Credit: Santiment
The average gas fees went down from ~$10 to $2.37 during the quarter. This is mainly due to the market crash.
The following chart shows the total ETH held by the top non-exchange addresses.
Image Credit: Santiment
There is some interesting data in this graph. It seems like these whales were accumulating ETH between April 1 and May 7. Since then, there has been a significant dip as the total ETH held by these addresses fell from 25.33M to 23.91M. So, they either dumped their coins or transferred them to other wallets.
Solana Q2, 2022 Analysis
The Solana price dropped from ~$136 to $33.70 over the quarter. Let’s start by looking at Solana’s DeFi ecosystem.
As you can see, the TVL has dropped from $4.56 billion to $1.6 billion. The biggest DeFi app on Solana by TVL is Marinade Finance.
Solana metrics and on-chain analysis
The first chart we are going to check comes from Messari.
The “daily unique fee payers” metric is the number of unique addresses conducting at least one transaction in the Solana network daily. This metric reached an all-time high of 450,000 in May. So, Solana users have definitely been active despite bearish market conditions.
The next chart shows developer activity within Solana. One can use “developer activity” to gauge a project’s commitment to creating a working product and continuously polishing its protocol.
Image Credit: Santiment
Developer activity rose steadily during April. Following that, dev activity plunged for the rest of the quarter.
Cardano Q2, 2022 Analysis
Cardano’s ADA dropped from $1.19 to $0.45 during Q2. Let’s start by looking at Cardano’s DeFi ecosystem.
DeFi on Cardano is still relatively young when compared to Ethereum and Solana. The total TVL dropped from $242.57M to $121.46M – losing almost half of its value.
Cardano metrics and on-chain analysis
Image Credit: Santiment
Cardano prides itself on its superior dev activity. During Q2, Cardano continued to build and the dev activity saw two notable spikes at the beginning and end of March.
The next chart shows the overall weighted sentiment of the Cardano during the quarter.
Image Credit: Santiment
So we have several spikes of positive sentiment at the beginning of the quarter. However, since then, the sentiment has been relatively negative. This makes sense since the whole market was somewhat pessimistic during this period.
Other observations from the market
Of course, the most dominant narrative of this quarter was the “Terra-3AC crypto contagion,” which we have already mentioned above. Let’s look at some more interesting narratives from the quarter.
Stablecoins
After UST’s complete horror show, USDT also lost its peg for a while. This started a migration from USDT to USDC.
As you can see, there has been a marked decline in USDT’s marketcap, which coincides with a gain in USDC’s.
Bitcoin miner activities
Bitcoin miners had a particularly brutal quarter due to falling prices. So let’s look at how they reacted.
Image credit: Into The Block
Ok, so we have the miner reserves metric here – meaning how much BTC they actually hold. Ideally, this number should be on the higher side. From April 1 to May 11, the total miner reserves went up from 1.96M to 2M. However, the number then dipped to 1.98M to finish the quarter.
The miner netflow metric further supports this.
Image credit: Into The Block
Note the prevalence of negative spikes post-May 11. It is crucial to note that the Terra depegging debacle started on May 11. So, we can somewhat deduce that during the market crash, the miners opted to sell their BTC, probably to make enough money to keep their operations afloat.
Looking Ahead To Q3
Let’s face it, due to a combination of reasons, Q2 was a bit of a downer. However, such cycles are expected in crypto. In Q3, all eyes are on Ethereum. The proposed mainnet merge will likely happen on September 15-16, 2022. How do you think the market will look at the end of Q3?
Meanwhile, why not check out how CoinSmart fared in Q2? Give it a read here.
