In 2022 the crypto community faced a crypto winter – an extended price decline period. But life goes on: new solutions to problems and new perspectives appear, on the background of which modern trends in the industry are being formed. Let’s make a detailed observation of every single trend in crypto.
Trend 1. Preparing for crypto spring 🌱
Crypto community members know what “a stitch in time saves nine” proverb means. Here is how it works now in a crypto industry context.
1. Investors are lining their pockets with crypto. According to the hold strategy, the bottom of the cycle is one of the best times to purchase coins. Some trading indicators signals that BTC already passed local minimums. The growth of non-zero bitcoin addresses and the coin's hashrate positive dynamic shows that investors are interested in crypto.
Hashrate is a computational power directed to mining of a certain coin. Metric shows how many machines are connected to the cryptocurrency’s net and how powerful they are.
Red curve is the amount of non-zero bitcoin addresses and BTC hashrate, gray curve is the bitcoin rate. Source: GlassNode.
Reminder: the bitcoin 52 weeks low, according to the CoinMarketCap, is $17,708. Some analysts believe in lower corrections. Due to some predictions, investors might see bitcoin close to $10k.
Regardless of when the bitcoin cycle bottom occurs, history shows that long-term investors have good opportunities to profit.
Historical bitcoin prices in USD. Source: CoinDance.
To understand the situation better, also read our fresh article about BTC.
2. Miners, despite periodic losses during the crypto winter, continue their work. Strong bitcoin hashrate growth confirms that.
Bitcoin hashrate. Source: bitinfocharts.com.
Experienced crypto community members understand that the new halving, which we expect in February 2024, can help BTC reach the ATH. It forms a bitcoin deficit on the market, which, according to history, pushes up the coin's price.
Bitcoin halving countdown. Source: CoinMarketCap.
Halving is an operation due to which mining rewards are cut in half. The thing is that emission of BTC is restricted. There are going to be only 21 million bitcoins. Every single halving, which the crypto community fixes approximately once every 4 years (every 210k mined blocks), causes the speed of bitcoin mining to be halved. Such an approach forms the basis for the BTC deflation model.
3. M&A activity by strong companies while other market participants are hedging their positions. Some crypto sharks have decided to use the 2018 scenario in the midst of the 2022 crypto winter. We are talking about the previous bear market – the time when enduring crypto companies swallowed their weak competitors.
One of the most active companies on the M&A market in 2020 is FTX. It has already taken control over several projects, including crypto lender Voyager Digital. The deal costs FTX $51 million.
Earlier, the company took control over the Canadian crypto platform Bitvo and over several other projects. In a CNBC interview from September 16 FTX CEO Sam Bankman-Fried claimed that his organization can spend about $1 billion on additional purchases on the crypto market. The media says that FTX's next target could be the bankrupt Celsius Network.
Other market participants also actively buy projects. For instance, investment company Dragonfly bought one of the oldest hedge-funds MetaStable Capital. The deal took place in August 2022.
Hedge-funds are investment funds that consist of investors' assets. Such funds’ managers use a wide range of strategies to reach the best yield with the lowest investment risks. Hedging means decreasing risks by spreading investments across several assets instead of putting all “eggs in one basket”.
Not all crypto companies have enough resources for their competitors' acquisition. Binance crypto exchange CEO Changpen Zhao believes that some organizations’ low purchasing power may be the consequence of their lavish behavior. In one of his Twitter posts, he mocked competitors, who made irrational deals previously. For example, he evokes a $16 million Coinbase Super Bowl ad from February 2022. A few months later, the company made a statement that they would cut the team because of the negative financial situation. Money spent on advertising could solve the problem. By the way, Coinbase went offline during the ad translation because of the system overload. Hence, part of the $16 million just burned due to technical issues.
Regular companies use crypto winter to make a profitable market acquisition too. For instance, e-commerce giant eBay took control over NFT-marketplace KnownOrigin.
However, there is another side of the crypto winter. Some companies decided to sacrifice cryptocurrency for good-looking numbers in their reports. For instance, Tesla sold 75% of its bitcoins for $936 million. Data came out in the Q2 2022 report.
Tesla Q2 2022 report fragment.
Tesla founder Elon Musk explained bitcoin sales as part of the company's effort to increase liquidity due to Chinese anti-covid restrictions. He clarified that this does not imply that BTC disappointed Tesla.
Earlier, Elon Musk claimed that cryptocurrency is a good tool in the fight against inflation. Despite bitcoins sales, Tesla remains one of the top-5 public companies that own BTC.
Top five publicly traded companies with the most bitcoins. Source: buybitcoinworldwide.com.
The largest bitcoin investor among public companies, software vendor MicroStrategy, on the other hand, used crypto winter to buy more BTC. One of the last deals dated on 20th September 2022.
Trend 2. Diving into metaverses 🤿
Trend was created by Meta (ex Facebook). Company announced the creation of a digital world in July 2021. In a bid to take their piece of the pie, other technological behemoths, like NVIDIA and Microsoft, announced similar projects too.
It is easy to explain why large companies are so interested in digital worlds. Metaverse helps people get access to brand-new income sources, alternative leisure time, and education. Statista says that industry can reach $678 billion by 2030.
How the digital asset industry will grow by 2030. Source: Statista.
A lot of companies announced the development of new tools for diving into the digital reality. Meta keeps going throughout it all. For example, the company released smart gloves for virtual reality in November 2021. You can see how the gadget works on the video.
On October 12, during the Meta Connect 2022 event, the company revealed another tool for diving into the metaverse – Meta Quest Pro headset with controller.
Meta Quest Pro has four outward-facing cameras. They help to visualize the environment the user is surrounded by inside the virtual world in order to interact with augmented reality.
How Meta Quest Pro 4 looks like. Source: Parametric Architecture.
Meta Quest Pro is equipped with the Qualcomm Snapdragon XR2+ chipset, it has 12GB of RAM and 256 GB of storage, as well as 2 displays 1920 × 1800 pixels each. The headset also can track eye position and face mimics. The approach chosen provides a better way to transfer real emotions in virtual reality. Developers also improved controllers. They integrated cameras into them to track the gadget’s position in space. Controllers work on the Snapdragon 662 chipset.
First Meta Quest Pro supply dated 25 october 2022. Pre-order is already available. Meta Quest Pro will cost $1500.
Approximately one month before the official presentation, web users found a leaked video with Meta Quest Pro unpacking. The author claims that he filmed a gadget that someone left at the hotel.
An interesting fact: in December 2021, one of Meta’s metaverse Horizon Worlds users suffered from harassment. Britain Nina Jane Patel claims that she was abused in the digital world by a group of men. She estimates their actions as assault in the metaverse. In response to Nina Jane Patel Meta developers expressed regret and promised to work on security. But only time will tell if new tools will help to fight crime in the digital world.
Trend 3. Play-to-earn rebirth 🎮
The blockchain-games market was also affected by the crypto winter. Gaming projects’ statistics show users’ interest decreasing.
The number of users (the white curve) and the volume of transactions (the green curve) on the blockchain games market. Source: DappRadar.
In particular, popular play-to-earn (P2E) projects show negative dynamics too. Such games offer users tools to earn money. Here are, for instance, the statistics of Axie Infinity – once the most popular P2E-game, for which citizens of poor countries used to take loans in order to enter the game.
Axie Infinity statistics. Source: DappRadar.
Axie Infinity reached its peak of popularity in 2021. The project attracted gamers with its tools that helped to earn money through the game. Developers offered users the chance to collect virtual creatures called Axies. Gamers can use them to earn money through fighting on the battlefield or the creation of newborn creatures. Axie Infinity payouts overcame median salaries in developing countries due to digital assets market bull run. That’s why citizens of such countries chose gaming, but not regular jobs. Crypto winter and technical problems decreased Axie Infinity popularity, and the level of income for players decreased.
Old gaming projects are rapidly replaced by fresh ones. For instance, gamers found the brand-new version of Axie Infinity in SolChicks. Unfortunately, the project’s idol statistics do not inspire confidence.
We can compare blockchain-game 2021 growth with ICO hype in 2017. First, in the wake of the general excitement, investors put their money into all available projects with only one goal in mind – to monetize the hype. Afterwards, they can realize that all that glitters is not gold. Here is where prudence comes. We can assume by analogy with ICO hype, that crypto winter can help shake off scam projects out of the blockchain-games market. Such a storm will leave only about 10% of really strong startups. The creators of Cryptobots, with whom we published an interview this summer, have the same opinion.
Anyway, some analysts see prospects for the further market growth despite the decline in users’ interest in blockchain games.
Trend 4. NFT stagnation 🖼
We also see metrics declining in the non-fungible tokens (NFT) market. For instance, its trading volume decreased amid the crypto winter.
Dune Analytics data shows that NFT market trading volume has decreased 97% since the beginning of 2022. For clarity, let's compare: in January the metric showed $17 billion, and it fell to $466 million in September. Analysts believe that negative dynamics is a consequence of crypto winter.
The most popular blockchain for NFT minting is Ethereum. Members of the crypto community prefer the network despite its high fees (in comparison to competitors). Meanwhile, The Block analytics recorded outbreak activity on the Solana blockchain. Let us recall that its main advantage is its high capacity. At the same time, Solana, according to the DeFiSafety team, is one of the worst choices. The project took second place in their rating of the worst blockchains ever due to technical features.
A small recall: NFT is an important part of the metaverses and blockchain-games industry. Developers use them to fill digital worlds. NFT helps determine the game's characters and tools’ belonging. At the same time, non-fungible tokens are beloved by art lovers and artists, who use them to protect author rights.
NFT demand makes analytics produce positive forecasts about market growth. For instance, the BlueWeave Consulting team believes that the non-fungible tokens industry will grow from a fixed $4.36 billion in 2021 to $20 billion by 2028.
Trend 5. Regulatory development 📖
At the same time that people's interest in the crypto industry is growing, regulators all over the world are developing legal frameworks for a new financial tool. As at October 11, crypto legality map by country on the bases of info about BTC looks like that:
Bitcoin legality by country. Source: CoinDance.
We can see various watchdogs approaches. For instance, the USA wants to form legal frameworks to integrate crypto into traditional financial systems in the safest way possible. This is demonstrated by the rejection of bans in favor of the development of a legislative framework. However, America does not want other countries to use crypto in an illegal way, including to evade sanctions.
At the same moment, we already have countries with fully legalized crypto. Salvador became a pioneer on this tender. The country legalized bitcoin in September 2021. Some jurisdictions, on the contrary, took the opposite position. For instance, crypto is banned in Afghanistan.
A small summary
We created this overview in the middle of crypto winter 2022 in order to compare our forecasts with reality after a while. The digital assets market has already successfully overcome such periods, largely relying on faith in the industry's potential growth.
Investors in 2022 have a huge advantage – they could extrapolate last year's results under certain conditions in order to predict market movements. For instance, they can compare the ICO hype and its bursting with the NFT market position in 2021-2022, to circumvent mistakes. Analysis of similar phenomena always helps to avoid mistakes, and not only in the field of cryptocurrencies, but also in life.
We found that the crypto market trends 2022 are related to each other. For instance, metaverse and P2E-market evolution have ties to the NFT industry due to demand for the non-fungible token technology in both areas.
Progress will probably be accompanied with new regulatory measures. The thing is that watchdogs are forced to work on a framework to put crypto under regulation, because it has become a necessity due to its rapid market’s growth. The crypto market expansion did not leave regulators any chance to keep a blind eye on it.
This article is not an investment recommendation. The financial transactions mentioned in the article are not a guide to action. Itez is not responsible for possible risks. The user should independently conduct an analysis on the basis of which it will be possible to draw conclusions and make decisions about making any operations with cryptocurrency.