In 2022, there are over 320 million crypto users in the world. However, in 2022, the cryptocurrency industry was low as the Federal Reserve increased interest rates and global liquidity tightened.
Additionally, there were several internal incidents, such as the collapse of Terra and the bankruptcy of the FTX and 3AC. Let’s get into the details of what the crypto market looks like, what the future holds, and events that took place in 2022 in Crypto.
Geographical Analysis of the Cryptocurrency Market
To measure the current development level of the cryptocurrency market, we consider four main dimensions.
- Crypto Population and Occupation Rate
Occupation rate is the ratio of crypto users to the total population in a country. As of November 2022, there are about 320 million crypto users worldwide, with a penetration rate of about 4.3%. Of this percentage, Asia has the largest crypto user base of about 40%.
- Traffic from Centralized Exchanges
CEXs are important in the crypto industry. They are user-friendly, and those new to Crypto start with them. The top three countries for CEX traffic are the US, South Korea, and Russia. South Korea has a high level of solidification in the social class due to the high unemployment rate and housing prices.
Therefore the young generation is pegging about its future by investing in Crypto. But, unfortunately, for Russia, the citizens have no choice but to embrace liberal financial systems as they face strict sanctions from the US.
- Decentralized Finance Traffic
In the last two years, DeFi has been one of the growing markets in Crypto. With the birth of liquidity mining, AMM, and other models, a large number of funds absorbed DeFi. The US is where the majority of DeFi users originate from.
Geographically, the US is a great hub for DeFi, with a market share of 31.8%, most likely because DeFi originated from here. The US has also invested heavily in Crypto; many startups flock to financial and tech hubs like Silicon Valley.
- Online Keyword Searches
You can see the level of public interest from the number of internet searches of particular keywords in the crypto market. For example, BTC, DeFi, and Cryptocurrency are the keyword searches in South America, South Africa, and the Middle East. It’s because of the financial infrastructure underdevelopment, mostly due to the high inflation rate. Therefore, it makes Crypto the best alternative for payments and stores of value.
However, NFT is the most searched keyword in the world. NFT can easily integrate with various industries of interest, such as sports, entertainment, and cultural creation, expanding its application scenarios.
Regional Cryptocurrency Market Analysis
- North America
The region has about 47 million crypto users, about 14.7% of the crypto population. Since its one of the most developed regions in the world, Crypto is prosperous. Additionally, DeFi Traffic is particularly strong. In this region, the country of interest is the United States.
In the United States, the traffic in CEX and DeFi sectors is 9.2% and 31.8%, respectively. The main type of transaction across CEX is BTC, followed by Ethereum, Dogecoin, and ADA, among others. The US has the largest BTC trading volume at a record $1.5 Billion.
But why is there rapid growth in the US crypto Market?
- The young generation is the main user group in the crypto industry. Young adults aged 18-34 account for 56% of the total crypto users. The age group is more risk-tolerant than the middle-aged group, who only prefer traditional investment options such as stocks and bonds.
- Law regulations around cryptocurrency are friendlier. For example, most US states allow friendly bills that promote local cryptocurrency activities within the law. With legal protection, large institutions and financial institutions offer legitimate asset management and other crypto services.
- Entry of large institutions such as Tesla and Microstrategy continue to enrich favorable scenarios where Crypto is an acceptable form of payment.
- Southeast Asia
Crypto markets continue to grow in Southeast Asia over the last few years. The total crypto population is now 46 million. Vietnam currently stands out in this region, as it has the highest adoption rate in Crypto.
It has about 20 million crypto users, who are more than a fifth of its population, becoming the first country in the world with the highest adoption rate. It’s why it’s one of Southeast Asia’s most rapidly growing crypto markets.
- Vietnam confirms the local financial modernization standard. Since cashless is the new norm, the local government has set a flexible crypto tax standard that facilitates the adoption of Crypto.
- Gamefi is a popular investment destination for many users. In Southeast Asia, gaming is essential in this region. It’s evident in the high number of mobile game downloads in Vietnam and the offers these gambling sites are using to lure and retain crypto customers. The notable offers are Bitcoin casino no deposit bonus and free spins. .
Singapore is now the new hub of Crypto. Also, it has become the best destination for tech startups, attracting huge numbers of innovators and unicorn companies, including crypto players.
In addition, the Monetary Authority of Singapore offers flexible regulations, such as allowing specific payment services to perform under exemption regulations when a license isn’t yet applied.
It makes Singapore one of the most Crypto friendly countries in the world. According to KPMG, in 2021, there were over 80 venture capital investments totaling $1.48 billion. Compared to 2020, there were only 26, totaling $110 million. This is a 1400% increase in value.
India has a large population with the education level of the young generation being high. They have a better understanding of the blockchain concept and cutting edge tech in crypto. It makes the crypto market in India a huge potential for the future.
The world’s attention was on Russia and Ukraine in the European region. Largely due to the conflict between these two countries, cryptos became more popular among citizens of both countries.
Cryptocurrency has become such a phenomenon that more than 14.6 million Russians (about 10% of the population) have experienced it firsthand, and the government has created policies centered on its use.
As of September 2022, Russia had passed legislation to allow the use of hydropower and nuclear power for cryptocurrency mining in some parts of the country. In addition, cryptocurrencies could be a major tool for foreign exchange trading after sanctions from countries worldwide devastated its economy.
Ukrainian banks, in response to the hardships of martial law, have placed restrictions on cash transactions; however, many Ukrainians are turning to cryptocurrencies in order to protect their savings from inflation.
- South America and Africa
Most countries in this region adopt Crypto for almost the same reasoning; high inflation, devalued currency, and domestic financial crisis. These countries include Argentina, Venezuela, Morocco, and Egypt. Therefore, stablecoins are a risk-hedging tool that can be ideal for value preservation in these regions.
Notable Events in Cryptocurrency Industry in 2022
- The collapse of Terra
It’s one of the most infamous incidents ever, which was once amongst the top 10 crypto assets. Many investors went broke after the meltdown. Terra started in 2018 as a blockchain for payments built on a dual currency mechanism of UST and Luna.
The collapse of Terra caused the price of UST to drop from $0.4 down to $0.2 within a few days, and Luna’s price fell all the way down to zero—so, the value of Terra’s stock fell by more than 40 billion dollars. BTC’s price fell further as LFG sold off their remaining 80,000 bitcoins.
- The bankruptcy Filing of Three Arrows Capital (3AC)
The hedge fund was founded in 2012 and borrowed huge sums of money from numerous companies to invest in digital asset projects. For the period spanning to March 2022, the company’s assets under management were $10 billion—including tokens such as Terra, Avalanche and Polkadot.
However, after the collapse of Terra, the company was said to be facing liquidity problems. A week later, all the debtors came collecting, and 3AC had to liquidate.
- The FTX Incident
Founded in 2019, FTX became a tycoon with $24 billion in just 3 years, making it the second-largest CEX in the industry. However, in November 2022, FTX declared bankruptcy due to the run on its users, draining its liquidity. The incident is still considered the largest in the current bear market.
The FTX incident has shaken the market. The company was one of crypto’s largest players, and a sister firm—Alameda—had stepped in to help other companies during the crisis before.
The central bank portrayed an image of the crypto world, investing directly in multiple projects. However, the FTX incident has had a serious effect on CEXs: people now distrust these exchanges due to its unexpectedness. The incident at FTX has damaged CEXs, as the public lost trust in them.
After the FTX incident, many major exchanges were inundated with mass withdrawals by panicked users.
To avoid future problems, exchanges have taken steps like disclosing their reserve holdings and adopting a code of conduct.
Although CEXs are currently under heavy scrutiny from financial regulators, this increased regulation will ultimately make the market healthier.
- Ethereum Merge
In September 2022, the much-anticipated Ethereum merge happened. It officially switched from proof of work to proof of stake as the consensus mechanism of Ethereum. The merge of Ethereum is a major landmark in the crypto market. Moreover, it will be a key to better performance improvement.
Furthermore, the issuance of Ethereum will drop after this merge, and with the destruction of EIP-1559, Ethereum will enter deflation in the future. The Ethereum transition to proof of stake (PoS) will reduce global energy consumption by about 0.4% annually.
- Largest M&A of the year: Huobi Acquisition
This year’s largest M&A deal in the crypto industry is the acquisition of Huobi by About Capital in Hong Kong at $3 billion in October 2022. Founded in 2013 by Lin Li, its market shares gradually increased to become the largest market share exchange in the Mandarin-speaking world after 2017.
Until 2021, Huobi, OKEX, and Binance are the top three crypto exchanges in the Mandarin speaking industry. Nonetheless, China has very strict regulations pertaining to Crypto. These include complete crypto trading, crypto mining, and any Crypto related business registered in China.
As a result of this ban, crypto companies represented by Huoni left the China market and set new sail overseas. It had an effect on the average trading volume of Huobi, from an average of $60 billion per day to about $5 billion.
- Where is GameFi heading?
In the year 2022, GameFi and X to Earn launched STEPN—one of their most notable projects. It had 1 million users and 4.72 million registered members, making $122.5 in profit in the first three months.
Eventually, SRPN entered a stage of dramatic slow growth, falling into what economists call “the death spiral” and burying the boom that was X to Earn in 2022.
Since its launch, STEPN has seen exponential growth by convincing users to walk and earn cryptocurrencies. During its peak in May 2022, STEPN had over 700,000 active users—but it has since declined due to increased competition from other similar apps on the market.
The bear market, the LUNA crash and news of STEPN’s user clearing in China caused panic among X to Earn members. However, a new hypothesis for mass growth was presented by Stepn with written-down models for us all to follow.
The FTX incident in November broke the BTC price of $18,000, which withstood for over 5 months, to lower than $15,500 once. Consequences have been seen in the crypto market, while effects will be digested by the market and the bottom line formed during fluctuations.
It’s expected to last until the first quarter of 2023, but the remedial actions and strong regulations will help shape the bottom of the bear market. Moreover, as learned from the Russia-Ukraine war scenario, more countries may adopt Crypto to hedge against risks from wars or sanctions. To this end, more countries will support cryptocurrency allowing industries to make safe and untraceable transactions. We are already seeing this with the rise in the number of sports betting sites that don’t require SSN.
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