- One notable observation is that there was a spike in DeFi activity in Q2, and this could be due to multiple reasons.
- An analysis of Bitcoin also disclosed that it had a negative 55.8 percent price return in Q2.
Crypto data aggregator CoinGecko has in a recent report disclosed that the Decentralized Finance (Defi) market suffered heavily in the second quarter (Q2) of 2022. According to the report, the total market cap of Defi fell from $142 million to $36 million, which is a 74 percent decline in the period under review. The reason was linked to the collapse of the Terra ecosystem in May, as well as the Defi exploit that was rampant in the period under review.
According to the report, the attack had a negative effect on the token prices as investors lost confidence in the hacked protocols. It can be recalled that Inverse Finance lost $1.2 million in a hacking incident, with Rari also losing $11 million. Regardless of the less active on-chain activities, it was observed that users remain resolute as they expect a turnaround in the future. The daily active users in Defi were reported to have decreased from 50,000 to 30,000. This is just a 34 percent decline.
One notable observation is that there was a spike in Defi activities in Q2, and this could be due to multiple reasons.
The first reason is that after Terra had collapsed, users moved in their numbers to Curve Finance and Uniswap to sell their Terra (LUNA) and USTC.
The other spike in Defi user activity was in June when crypto lending platform Celsius announced withdrawal restrictions. Celsius later filed for bankruptcy.
In both events where centralized entities have failed, users have flocked to enjoy DeFi’s permissionless nature.
NFTs, Bitcoin, Ethereum, and exchanges suffered with Defi
The report further disclosed that the Non-Fungible Token (NFT) market equally struggled as its trading volume fell by 26 percent from its highest recorded in June 2021 to $7.6 billion. June 2022 was also the worst NFT performing month in the past year. Its trading volume reached $830 million.
An analysis of Bitcoin also disclosed that it had a negative 55.8 percent price return in Q2. Bitcoin was in a downward trend throughout the second quarter of the year and even remained in the red for nine consecutive weeks for the first time. The asset also broke multiple resistance levels including the $30K and $20K. Bitcoin also recorded a yearly low of $17,760.
Ethereum also saw a price return of negative 67 percent in Q2. It also recorded 11 weekly closes in the red from the start of April to the middle of June.
The asset also traded below $900 briefly before making a quick recovery to $1000. Exchanges as well had their fair share of the market struggle as the top ten decentralized exchanges (DEX) and the centralized exchanges (CEX) saw a looming recession. Their total trading volume decreased by 11 percent from Q1 2022 to Q2 2022.