After analyzing the disastrous Q2 for the crypto market, a CryptoCompare report tries to predict what will happen in the coming months.
A prediction about the third quarter for the crypto market
After reporting a disastrous second quarter of 2022, CryptoCompare attempts to take stock of the market and predict what the course of events may be for the coming months:
“The second quarter of 2022 was catastrophic for the digital asset space. Bitcoin and Ethereum fell 56.3% and 67.4% respectively, recording one of the worst quarterly results in their history.
Regarding the last quarter, the event that definitely contributed a lot to this real collapse was the collapse of the Terra ecosystem and its stable currency and, consequently, the bankruptcy of hedge fund Three Arrows Capital.
Among the most interesting aspects highlighted in the report analyzing the cryptocurrency, stablecoin, DeFi, and NFT market, is a denotation of how stablecoins fundamentally withstood the impact of the UST collapse:
“In the report, we conducted an analysis of USDT redemptions, which suggests that Tether’s collateral structure is sustainable and will be able to handle severe stress tests, as it could effectively convert its T-Bills balance to cash and meet significant redemptions.
DeFi and NFT also react poorly
The markets DeFi Y NFT They are also very negative. The Total Value Locked (TVL) in DeFi protocols falls 65.7% to $93.2 billion in the second quarter of 2022.
The scenario for the near future seems to be related mainly to macroeconomic factors, such as the inflation data, which could have severe consequences on cryptocurrencies, as well as the price of the dollar and the Nasdaq, which seems to have created a increasingly close correlation with the cryptocurrency market.
The CryptoComapre analysis analyzes the situation of Tetherwhich may initially have to use all cash positions to pay redemptions, and then only US-T bonds will be used for redemptions.
The report then continues:
“Of course, this would be in extreme market conditions, where 10-30% of the total USDT market capitalization is redeemed in the space of 7-30 days.”.
Analysts at CryptoCompare say that all signs point to a more sustained period of distress for the DeFi sector in the coming months, with the TVL expected to remain in the current range through 2022:
“Another challenge for DeFi protocols going forward will be their adherence to the spirit of decentralization, with a number of DeFi protocols exhibiting behaviors reminiscent of centralized entities; these are described in the table below.”