During the third quarter, there were several anomalies surfaced in the crypto market but the market cap increased
According to Q3 2022 crypto report by CoinGecko, a cryptocurrency data collector, during the third quarter, there were several anomalies surfaced in cryptocurrency markets, but the market cap increased by around $100 billion compared to Q2. Earlier this year, the digital asset industry witnessed heavy sell-offs.
In Q2, the crypto bear markets have largely decoupled from stock performance, but in Q3, cryptocurrency and tokens traded almost in exact tandem with the U.S. S&P 500 index. As the performance of the cryptocurrencies versus the S&P 500 index stood at 0.85 in the said period.
Although Bitcoin’s value saw a 1% drop during Q3, it outperformed each asset class aside from the U.S. dollar Index. The U.S. dollar measures the exchange rate of a basket of foreign currencies compared to the U.S. dollar.
When the economy goes in an uncertain condition, then the worldwide investors move to safe-haven assets such as the U.S. dollar and the Swiss franc. As the stablecoins are mostly pegged to the U.S. dollar, because of this, stablecoins saw their circulation plummet by $4.7 billion in Q3.
The main factor behind this plunge seems to be the OFAC’s sanctions on Tornado Cash, a cryptocurrency mixer. These sanctions made it a criminal offense for U.S.-based stablecoin issuers and users to interact with Tornado Cash.
Moreover, in Q3, the total market capitalization in DeFi applications increased by 31.3%, and there was a system-wide rebound across all verticals. The only one not in this rebound was the realm of asset management.
In Q3, the trading volume of NFTs saw a 77.4% quarterly plunge from Q2, and the number of wallets that owned an NFT increased by 1 million. Recently, some of the players from the crypto community have started to call the bottom of the market turmoil.