What would the state of the crypto industry be without the downfall of Terra, Three Arrows Capital, and so many crypto banks?
Apparently…… It will be much better.
Unfortunately, the damage has already been done.
We are now wondering how quickly the industry is recovering?
The third quarter of 2022 was a very good quarter for cryptocurrencies.
Broadly speaking, the sector is up 10%, and earnings on many assets have improved significantly.
Ethereum, for example, rose 31% due to the success of the merger – a technical upgrade to the Ethereum blockchain that reduced its carbon footprint by more than 99%. At the same time, Lido jumped 260% as users flocked to its “liquidity staking” service.
These results are all the more profound given the global macro environment, where the S&P 500 fell more than 5% in the quarter.
The positive price trend of cryptocurrencies is supported by a generally positive news stream. On the regulatory front, the White House released its first-ever “comprehensive framework” on cryptocurrencies, while Congress has taken important steps in creating thoughtful stablecoin rules.
Meanwhile, venture capital continues to flow into the space (albeit at a slower pace), and multiple blockchains have passed important technological milestones.
However, all this progress cannot hide the damage caused by the collapse of Terra and 3 AC, and the resulting crypto credit crisis in the second quarter.
The second quarter was the worst quarter for cryptocurrencies in 10 years, with leading large-cap assets down nearly 63%. For that matter, the recovery in the third quarter was modest at best.
Seriously, the third quarter was not without bumps. We are seeing threats from the SEC to take aggressive enforcement action, as well as continued declines in user activity in DeFi, NFTs, and other areas.
Zooming in, however, we’re excited about the power we’re seeing in developer activity, one of the most fundamental measures of growth in the space. For example, Ethereum’s crypto application deployments grew 143%…