H1 2022 crypto report: $1.3tn lost in market cap, 70% bitcoin millionaires erased

Technext has observed in a Q1 2022 report that perfectly illustrates the difficult first half of 2022 that the market has had. The market was dealt a heavy blow in February and March following an invasion by Russian forces against Ukraine and the US Federal Reserve’s move to curtail rising inflation by increasing interest rates. 

Amid those unfortunate events, Terra ecosystem tokens LUNA and UST crashed in May, and the debacle rocked the entire financial market.

Terra’s crumbling resulted in the failure of Three Arrow Capital (3AC), which had a significant investment in Terra and is now being faced with liquidation. 

Due to the unfavourable market conditions, popular crypto lending platform Celsius Network was forced to halt users’ assets’ withdrawals, swaps, and transfers in June. 

To cap off a miserable first half of 2022, companies like Coinbase, Crypto.com, and Gemini had to lay-off a significant number of their workers, in order to cope with the downturn in the market. 

H1 2022 crypto report 

The crypto market cap lost 60% of its value in H1 2022, wiping off around $1.3 trillion, and it has struggled to keep its head above the $2 trillion level since the beginning of the year.

Although it managed to reclaim the $2 trillion mark briefly in February and late March/early April, it has been on a downward spiral since then. 

According to data from Coinmarketcap, the cryptocurrency market capitalisation stood at $2.2 trillion at the year’s turn, but was well below the $1 trillion mark, on June 30. 

The value of the global crypto market cap on January 1, 2022, was $2.188 trillion, but since that date, it has lost more than 60% of its value or over $1.3 trillion, dropping to $860 billion, where it closed yesterday. 

As a result of the decline of Bitcoin and the wider crypto market, holders of the flagship digital asset have been exposed to colossal losses, as evidenced by the number of BTC millionaires decreasing by almost 70% in the first half of 2022. 

According to statistics from BitInfoCharts.com, as of June 29, 2022, addresses with a BTC balance of more than $1 million were 26,284. 

However, using a web archive tool, Wayback Machine, it was discovered that on January 5 2022, 99,092 BTC addresses had more than $1 million worth of Bitcoin. Indicating a decrease of 69% since the beginning of the year.

The drop is even more significant if the time frame is shifted farther to October 2021, when BTC was trading near its all-time high. On October 28, 2021, 116,139 Bitcoin addresses were confirmed to be millionaires. A decline of 74% between then and June 29, 2022.

Bitcoin records quarterly low

The largest digital asset by market cap keeps recording low stats amid the ongoing bear market.

According to data from Coinmarketcap, Bitcoin was trading at around $46,735 on April 1, beginning the 2nd quarter of 2022 but closed June at $19,918. Making it a decrease of 58% in the last three months, its worst quarterly loss in 11 years. 

Notably, Bitcoin started the year around $47,000 after rallying to an all-time high (ATH) of $69,044 on November 8, 2021. At press time, the flagship asset is trading at $19,452, down 71.71% from its all-time high. 

What are the risks now?

The performance of the crypto market is continuing to be negatively impacted by a number of issues, some of which include increased regulatory scrutiny, volatile market conditions, geopolitical turmoil, rising inflation, and rate hikes.

For many people, the ongoing bear market is regarded as the toughest since the inception of the nascent asset class, as investors have seen the value of their investments shrink massively.

With such market uncertainty, more crypto traders are looking to short Bitcoin. Many investors have no choice but to ponder when BTC finally hits its bottom.

According to a poll by veteran futures trader Peter Brandt last weekend, the majority of respondents believe BTC is yet to find a bottom. Some analysts, including Brandt, had predicted that BTC’s bottom is around $10,000 to $14,000.

However, there is a bit of good news. Financial strategists from the investment banking company JPMorgan Chase & Co are confident that the ongoing bear market has reached an advanced stage and it will soon come to an end.

The strategists predict that the ongoing crypto deleveraging cycle may not last long following the growing amount of bailout funds given to companies largely affected by the market dip. 

“The current deleveraging cycle may not be very protracted since crypto entities with stronger balance sheets are currently stepping in to help contain the contagion,”

According to them, venture-capital funding, which is an important source of capital for the crypto industry, has also continued at a healthy pace between May and June.

What they are saying is the cryptocurrency market has gone beyond a good portion of the current bear market troubles and it is only a matter of time before crypto prices rally again. We will see as that plays out in the next few months.