The crypto market has had an interesting Q1, 2022 – to say the least.
At the beginning of the year, the overall market cap was around $2.3T. Following that, the markets went through a slump period before recovering at the end of the quarter. The market has jumped back to where it was at the beginning of the year. Have the buyers successfully canceled out the losses? We will need to wait and watch. For now, let’s go through our crypto market review for Q1, 2022.
Bitcoin Q1, 2022 Analysis
For the most part, Bitcoin’s price has remained stuck in a narrow range between $37,000 and $42,000.
Image: Trading View
Towards the end of Q1, there was a potential breakout to $48,000. However, the markets have slowed down since then. This late surge was catalyzed mostly by Terra acquiring $10 billion of BTC to back the UST stablecoin. To everyone’s surprise, BTC has remained relatively stable despite the tumultuous macro landscape, namely:
- The Russia-Ukraine war and the subsequent socio-economic fallout.
- European Union’s decision not to ban proof-of-work cryptocurrencies.
- The US Federal Reserve announcing multiple rate hikes.
Bitcoin Metrics And On-Chain Analysis
In this section, we will be looking at some popular Bitcoin metrics and on-chain analysis.
Bitcoin Hashrate
Image: BitInfoCharts
For a cryptocurrency, the hashrate is the total computational power of the network. Therefore, the more the hashrate, the better the speed and security. As we can see in the chart, Bitcoin’s hashrate has reached all-time high levels and crossed 200 Ehash/s.
Number Of Addresses With Non-Zero Balance
Bitcoin remains as popular as ever. The number of non-zero addresses, i.eaddresses holding some BTC has ballooned. You can see a steady increase from 39.6 million to 41.2 million. It seems like more and more people are getting into BTC.
Addresses Holding >1k BTC
Speaking of non-zero wallet addresses, it seems like people are actually buying large chunks of BTC. The graph above shows the number of addresses holding at least 1,000 BTC. Notice the peculiarity of this chart?
Apparently, towards the end of February, the number of addresses owning >=1000 BTC spiked from 2121 to 2259. This number reached a peak of 2300 before settling at 2257.
The War and Bitcoin
The ongoing Ukraine-Russia war has seen Bitcoin and crypto play a major role for both sides. Before the war, both Ukraine and Russia were looking to legalize crypto. Ukraine, in particular, managed to push through its bill on February 17, 2022. The bill officially legalized the classification, ownership, and legal status of virtual assets. Ukraine has since attracted donations from all around the world to fund its war efforts.
Ethereum Q1, 2022 Analysis
Ethereum is a fascinating protocol. Not only is the native token “ETH” a desirable store of value, but also because it has given birth to two multi-billion dollar ecosystems – DeFi and NFT. First, however, let’s look at ETH’s price action.
From the beginning of December to almost the end of January, Ethereum’s price dropped dramatically. ETH started the year at ~$3,820 and fell to $2,700 on January 27. Since then, the price has recovered to $3,270.
“Wen Eth2?”
2022 is a significant year for Ethereum because we will potentially see the transition to Ethereum 2.0 and the consensus algorithm change from proof-of-work (PoW) to proof-of-stake (PoS). Since this is such a massive upgrade, the progress has been relatively slow. However, news came out on March 16 that this PoW-PoS merge has successfully happened in the Kiln Testnet. In other good news, more than 10 million ETH has been locked up in the Ethereum 2.0 contract.
The State Of Ethereum DeFi
Ethereum still rules the DeFi world, despite tough competition from Terra and Avalanche.
Image Credit: DeFi Llama
Despite a significant fall, the total value locked in DeFi never dropped below $100 billion. That’s a very positive sign as it properly showcases the resilience of the DeFi market.
Image Credit: DeFi Llama
Curve and MarkerDAO remain the kingpins of the DeFi world.
The State Of Ethereum NFT
Up next, let’s look at the state of Ethereum’s NFTs. The total trading volume has almost reached $20 billion. Total sales hit $7 billion in January – an all-time high. However, things have slowed down considerably since.
Image Credit: DeFi Llama
Here are the top 5 projects on Ethereum, based on volume in the last 30 days. It is hardly surprising to see the names on the list.
Image Credit: DeFi Llama
Solana Q1, 2022 Analysis
Up next, let’s look at Solana (SOL).
The Solana price has mostly trended between $80 and $115. The price is currently trading around $115 following a slight correction. Solana was plagued by scalability and performance issues at the beginning of the year, which halted the network multiple times. To mitigate this, Solana updated to version 1.8.14.
The State Of Solana DeFi
Solana DeFi TVL started the year at $11.20 billion. Since then, it has dipped to $7.5 billion. Unsurprisingly, the biggest DeFi app on Solana is Serum.
Image Credit: DeFi Llama
The State Of Solana NFT
Image Credit: DeFi Llama
Solana has firmly established itself as the second biggest NFT platform after Ethereum. In fact, JPMorgan analysts believe that Solana will takeover the NFT throne from Ethereum due to the latter’s performance issues. As of now, Solana has done a total NFT volume of $115.87 million. With OpenSea listing Solana NFTs, expect this number to skyrocket.
Cardano Q1, 2022 Analysis
Finally, let’s look at Cardano in Q1, 2022.
Cardano had a mini-breakout in January, which saw ADA jump from $1.07 to $1.60. Following that, the bears took control, and ADA slumped all the way down to $0.78 on March 13. Since then, the buyers have recovered the price to $1.08.
The price drop was triggered on Jan 17 and Jan 18. The following chart from Santiment explains why.
The chart counts the number of whale transactions worth more than $100,000. You can see multiple spikes on Jan 17, which triggered the downfall. So it looks like the whales took advantage of the pump to pocket their profits.
A Quarter Filled With Explosive Growth
Cardano exploded in popularity this quarter. Since the start of 2022, the number of wallets holding ADA surged by 500,000, and the number of total wallets in the ecosystem crossed the 3 million mark at the start of February.
Now, let’s check out Cardano’s development activity on Santiment.
As you can see, there are multiple spikes in the dev activity metric on Santiment. Regardless, the dev activity has been very impressive on Cardano. According to Finbold’s report, the number of Cardano-based smart contracts surpassed the 2,000 mark for the first time ever.
Looking Ahead To Q2
Regulations are likely going to play a big role in the market’s health. It will be interesting to see how the policymakers embrace (or not) the digital asset class in 2022.
The upcoming Ethereum 2.0 update will likely impact Ethereum and its accompanying DeFi and NFT ecosystems. Plus, it is crucial to watch the Ukraine-Russia war and gauge its long-term impact on the crypto markets.
Finally, the metaverse ecosystem is also something to watch for. Gaming protocols have done well in 2022, but this could just be the beginning. With so many celebrities and companies getting into the metaverse, it will be fascinating to see how much the ecosystem grows in 2022.
