While worldwide cryptocurrency markets faced the uncertainties due to high inflation. Despite Russia’s invasion of Ukraine and a hike in federal rates for a single quarter of 2022, it still managed to clock $2.2 trillion market capitalisation in the last few weeks, as reported by CoinGecko. According to the report, decentralised finance (DeFi) suffered losses in the first quarter of 2022. It also stated that other geographical and macroeconomic factors might have affected the demand for cryptocurrencies.
Insights from the report showed that the top 30 cryptocurrency market capitalisations were affected since November 2021, and ended the quarter at a market capitalisation of $1.9 trillion. According to the data from the report, cryptocurrency tokens such as FTM, OKB and UNI fell out of the top 30 rankings, while FTT, ETC and WAVES entered the space. Spot trading volumes were also affected but remained steady throughout the first quarter of 2022.
The report further stated that the top five cryptocurrencies sustained losses in the first quarter of 2022 compared to their gains in 2021. Besides LUNA, BTC and XRP, other top 10 cryptocurrency tokens sustained losses in the same quarter. Within the top thirty tokens, ETC, FTT and WAVES received gains of 45.7%, 33.6% and 256.1%, respectively.
As per the report, while DeFi tokens underperformed, LUNA managed to record a 24% increase in price on top of a 121% increase in the fourth quarter of 2021. With centralised exchange tokens gaining towards the end of 2021, FTX token suffered a 25% loss. GMT, the governance token of STEPN, increased by 140 times within a month of its release. The popularity of similar projects such as Genopets and Wirtual also grew.
In contrast with worldwide cryptocurrency markets, the top five stablecoins grew by 13%. The share of stablecoins market also grew in the middle of geographical and macroeconomic uncertainties. Data further showed that the market capitalisation of the top 30 cryptocurrency markets and the S&P500 correlated at 0.74 for the first quarter of 2022, compared to the correlation of 0.30 in the fourth quarter of 2021.
According to data provided by CoinMetrics, Bitcoin and S&P500 reached a valuation of 0.56 on March 31, 2022. Bitcoin’s correlation with traditional finance markets started to increase with the beginning of the Covid-19 pandemic. Market capitalisation of the top 30 cryptocurrencies correlated with Bitcoin at 0.96 for the first quarter of 2021, which increased from 0.92 in the fourth quarter of 2022.
(With insights from a CoinGecko report)