The initial Terra Luna collapse’s blow was immense. While the downfalls and bankruptcies that followed it were catastrophic, the fallout from the FTX-Alameda collapse was almost unforeseen. It wasn’t just a downfall but an enormous breach of ecosystem-wide trust.
Prior to the collapse of FTX (FTT-USD) in early to mid-November, many assets in the crypto market were positioning themselves for positive returns at the end of the year. Unfortunately, the FTX collapse and other events led the year 2022 to go down as one of the worst years for crypto investors since the industry began with the arrival of Bitcoin (BTC-USD) in 2009. The year 2022 will be the second worst single-year performance for Bitcoin since 2011 in terms of both year-over-year (-64%) and decline from an all-time high (-74%). However, this bear market cycle is distinct from previous ones. Bitcoin’s crypto market dominance increased from 32% during Ethereum’s (ETH-USD) early January 2018 peak to over 50% during the 2019 crypto market bottom.
Bitcoin’s dominance increased as many ICO altcoins failed to reclaim all-time highs during the previous bull run. Given the magnitude of the crypto selloff, Bitcoin’s 38% market dominance is low compared to previous cycles. Assets other than Bitcoin have proven resilient in this crypto winter cycle. Ethereum’s market dominance is stabilizing in the 18-20% range; ETH dominance figures that were indicators of peaks may now be transitioning to dominance bottoms if ETH is ever to outperform BTC in terms of market dominance.
The crypto market cap fell by 75.8% from its peak to its low. The market capitalization of cryptocurrencies decreased by $1,429 billion (65.4%) to $756.15 billion at the end of 2022. The crypto market cap has returned to levels last seen at the beginning of 2021 due to defaults and bankruptcies. The market capitalization of cryptocurrencies…
