Investor sentiment has taken another hit as investors worry that the Federal Reserve may raise interest rates more sharply to curb inflation. Bitcoin continued its decline today, falling as much as 6.5% in the morning to hit its lowest level since December 2020. In addition, a range of other mainstream tokens, from ethereum to Avalanche, have posted heavy losses. Investor sentiment on the crypto market as a whole is very bad today. Today, Edward Moya, senior market analyst at Oanda, said that if Bitcoin falls below $20,000, it could lead to an even worse price move ……
Crypto Market in Winter
Cryptocurrencies have fallen all over the place recently, with BTC falling to $21,000 and ETH falling to $1,100. In addition, the total market cap of cryptocurrencies has also plummeted, with the total market cap of cryptocurrencies currently falling to near $900 billion, according to CoinMarketCap data, with the total market cap currently standing at approximately $912.2 billion ($912,264,249,830), the lowest point since January 2021. In addition, with the general plunge in cryptocurrencies, the total amount of blowouts has continued to soar. According to coincoin data, the total amount of network-wide blowouts has reached $1.46 billion in the past 24 hours, with a total of 220,500 users blowing out their positions. Among them, $291 million of BTC positions were exploded and $436 million of ETH positions were exploded.
Data source: CoinMarketCap
The two mainstream currencies BTC and ETH are both down heavily, but compared to BTC, ETH has been in crisis recently. Today, ETH fell below $1,100, back to the beginning of 2021, and compared to its previous peak of $4,815, it all seems like a dream, which seems extremely unreal. In addition to the severe drop, the panic over ETH is currently at its peak in the market, and the reason for this is to start with the stETH de-anchoring, a token pegged to Ether’s ETH.
The de-anchoring of stETH drove the whole crypto market to plunge during this period, which reminded many people of the tragedy of LUNA and UST, making many people’s panic intensify. After all, the influence of ETH is far greater than LUNA, and once it collapses, it will be a bigger disaster for the whole crypto market. Although such a statement was soon followed by a technician coming to disprove it, saying that it was reasonable for stETH to be slightly below 1 ETH for a long period of time, much less to cause a crash of ETH, the stETH decoupling incident had already sown the seeds of panic.
In a bear market, a little bit of wind and grass can also set off a shocking wave. Celsius started to sell a lot of stETH on Curve in exchange for ETH and sold a lot of ETH after the lightning burst, causing stETH price to fall again, which made stETH investors start to follow the trend in panic, and then the market sentiment of ETH started to fall into a deeper panic.
Of course, there are no eggs in a bear market, and according to L2Beat data, the total TVL of Layer2 network fell to $4.14 billion, a new low since October 28, 2021, with Arbitrum ($2.02 billion), dYdX ($959 million) and Optimism ($683 million) being the Layer2 networks with the highest TVL, respectively. networks.
In addition, the NFT market, which was still active some time ago, has also started to go into a bearish chill. According to NFTGo.io data, when the market started to plunge yesterday, the intra-day drop in floor prices of blue-chip NFT series such as BAYC and Azuki were over 20%. The overall dynamism of the market has also dropped quite a bit. It can be seen that the current crypto market has fully entered the bear market winter. Although this winter will last for a long time, how many of the Web3 natives who really have faith in their hearts are afraid of the winter?
A look at the new crypto stars that have fallen this year
New projects in the crypto industry are always emerging, and every bull market is always accompanied by the emergence of many new stars, and every bear market is always accompanied by the fall of new stars. In the blue ocean of Web3, most of the projects that are in the red will end badly, and very few of them can really succeed. But even if these projects eventually fall, they still provide an indispensable force for the development of Web3 and the crypto industry, which is a great honor even if they fail.
So after a thousand sails, what are the new crypto stars that have become very popular and passed away this year?
1、LUNA
Do you remember how LUNA rose against the trend in February? LFG sold nearly 20 million LUNA and raised $1 billion to buy BTC as a reserve for UST in the downturn of the mainstream market at that time. This move made LUNA rise against the trend in the crypto market, which was suffering from waterloo at that time, and the buzz of a little green in the middle of a million red bushes made LUNA become the most eye-catching hot spot in the cryptocurrency circle for a while.
February 23rd Market Rise Overview Chart
At the time when LUNA was so hot, many people in the crypto market started to say that Terra, which was growing at a great speed, might collapse. This prediction came true in less than three months.
On May 7, 2022, Terraform Labs, the organization behind Terra, executed a planned and publicly announced withdrawal of $150 million from the Curve liquidity pool 3pool. However, shortly after the withdrawal, two users swapped approximately $185 million in USTs for USDCs over a two-hour period, attacking the less liquid and vulnerable mining pool. Terraform Labs then withdrew another 100 million USTs from the 3pool to rebalance it. But these two large transactions led directly to the UST being unpegged from the USD, triggering a massive sell-off on the exchange, and the massive sell-off made the UST unanchored even more.
On May 9, UST’s custodian Luna Foundation Guard (LFG) sold billions of dollars worth of BTC reserves to counter-purchase UST from the market in order to save the token’s anchoring position. however, ultimately LFG was unable to save UST from the death spiral.
It is also worth noting that the algorithm that pegged UST to USD was a mint-and-burn mechanism between LUNA and UST, in which there was a huge arbitrage opportunity when UST lost its peg (users could buy a lower-value UST from an exchange and then burn LUNA for $1). This also led to a massive minting of LUNA, which eventually turned on a plunge mode in hyperinflation and eventually went to zero. The algorithmic stablecoin empire thus collapsed overnight.
2、Celsius
Among DeFi’s lending platforms, Celsius Network is fairly typical. Celsius is a larger money management platform and is still relatively well-known in the US. However just in the midst of the recent market turmoil, Celsius announced yesterday that it was suspending all withdrawals, transactions and transfers, with the official reason given being extreme market conditions and the need for stable liquidity, and that the move was for the benefit of the entire community. After the news came out Celsius’ token CEL went on a plunge mode.
The direct cause of Celsius’ collapse seems to be due to the de-anchoring of stETH, but the liquidity crisis faced by Celsius this time is also the fruit of its own personal sowing. Previously Celsius promised depositors a maximum 8% return on Ether deposits, and in order to achieve this return, Celsius chose to replace a large amount of ETH with ETH2.0 derivatives such as stETH. In order to achieve this return, Celsius chose to replace a large amount of ETH with ETH2.0 derivatives such as stETH, thus gaining pledged revenue, which directly led to a lot of funds Celsius could not get back, thus falling into the current dilemma of insufficient liquidity.
It’s worth noting that a large part of Celsius’ collapse could be attributed to its team’s crappy investment skills. First of all, Celsius had the honor of being one of the seven whale wallets that contributed to the collapse of UST, and although the money lost in the UST incident was not much, once the news was disclosed, Celsius fell into a crisis of confidence and a large amount of money started to leave Celsius at an accelerated pace, which became the trigger for Celsius to fall into the collapse crisis.
In addition, Celsius’ two theft experiences were also uncovered, as the Celsius Network lost at least 35,000 ETH in the Stakehound key loss crash in May 2021, but interestingly, Celsius remained “secret” after the theft until June 2022. “It was not until June 6, 2022, when Dirty Bubble Media first disclosed the information, that users became aware of the theft. In addition, Celsius also lost $50 million in the Badgerdao hack.
Faced with an unfillable hole, Celsius eventually chose to suspend all withdrawals, transactions and transfers, and Nexo’s proposal to buy Celsius seemed to declare Celsius’ bankruptcy.
3、Axie Infinity
When it comes to the project of 2021, the former king of the chain game Axie Infinity must have a place, in the week of August 8, 2021, the game at its peak revenue of more than $215 million. Last October, Axie was even valued at $3 billion by its creator Sky Mavis after a $152 million funding round led by a16z. But since November 2021, Axie Infinity has been in steady decline mode, with revenues plummeting again and again, especially after a massive hack of the Ronin Network, the sidechain on which Axie Infinity is based, in March.
In addition, according to CoinMarketCap data, Axie Infinity’s gaming token SLP has also been falling since November and has now dropped to $0.003, but is down 99% from its previous all-time high of $0.4191. It is clear that SLP is in a zeroing crisis.
Currently, Axie Infinity’s economic activity relies on two main functions – battle and reproduction, using Axie pets to earn AXS and SLP tokens, and consuming AXS and SLP through Axie pet reproduction. Once SLP goes to zero, Axie Pets will become worthless and the Axie Infinity ecosystem will come crashing down.
The Axie Infinity team is also working hard on the development of the project, trying to solve the problem of preserving the value of the token, and working hard to bring Therefore, although we don’t know if Axie Infinity can survive this long winter, we can see that Axie Infinity still has a little bit of strength to turn around against the wind.
In conclusion
Nowadays, the crypto market is generally in a downturn, and it is foreseeable that the bear market will still take a long time. Eventually, many people may lose confidence and eventually leave after feeling the exhaustion and despair brought by the bear market again in the long winter. But more people will choose to believe in the coming of the light.
At present, the crypto market is still in a high-speed development stage, and many projects are in the exploration stage. The bear market will be the best cradle to explore the technology, and the gloom shrouded by the bear market can make all the overly agitated hearts of the bulls return to peace again, and lock their eyes on the value of Web3 projects.
Of course, the projects that fell in the bear market are not to be rejected, there is a kind of failure called failure is still glory, the fallen projects will become the cornerstone of Web3 development, and more projects will continue to improve on the basis of this progress, towards the next bull market.
