The end of June completes the third consecutive month of Bitcoin (BTC) lows, leaving the first half of 2022 marked in history as the period in which the cryptocurrency retreated, for the first time, to below the high of the previous bull cycle. , that is, below the old record of US$ 20 thousand, reached in December 2017.
The year started badly after a strong sell-off that took Bitcoin from $46,000 to $35,000, but gave investors hope again in February and March, when the digital currency erased losses. From April onwards, however, echoing a climate of greater apprehension due to the war in Ukraine and fears about the effects of high inflation, prices began to decline again.
In May, the crypto market began to generate fears due to internal issues with the collapse of the Terra (LUNA) project and the TerraUSD (UST) stablecoin, which wiped out US$ 18 billion from the hands of investors.
In the month ending today, analysts remain concerned about the systemic effects of the crisis on projects in the sector, such as the lack of liquidity of large investment companies, which have seen their assets melt in recent months, in addition to the risks of contamination.
Under the effect of the collapse of the Terra project, the hedge fund Three Arrows Capital (3AC) took center stage in June amid margin calls on several lending platforms. According to experts, the crypto market is going through a period of strong deleveraging in which 3AC has a prominent role.
Altcoins, which tend to suffer more than Bitcoin in times of stress, fell sharply in the first six months of the year. Among the biggest losses of the semester were precisely TerraClassicUSD, the name of the former TerraUSD, in addition to Fantom (FTM), which lost two of the main developers of its project at the beginning of the year.
As the case of UST has shown, not even stablecoins have escaped the declines. One cryptocurrency, however, managed to navigate the delicate scenario relatively well and recorded a rise in the period: UNUS SED LEO (LEO).
Among the largest cryptos in the world, Bitcoin ends the semester with losses of around 60%, quoted at $19,100, while Ethereum (ETH) lost 72% in value, being close to $1,000. All of the top 10 cryptocurrencies by market cap have seen a drop of more than 60% in the period.
Check below the biggest highs and lows of the first half of 2022, considering only the 100 largest assets in market value (remembering that the cryptocurrency market does not close, and there may be variations until the end of the day):
Biggest highs of the semester
The only winner of the semester, UNUS SED LEO (LEO), a token from the Bitfinex exchange, has its performance explained by the buyback program announced by the exchange in 2019: the company committed to using about a quarter of the revenue to acquire, on a monthly basis, the LEO token on the market until its stock runs out.
The initiative was announced three years ago, in June 2019, as a way to compensate holders of the digital asset for Bitfinex’s $850 million losses to cover a hole in the accounts of a company called Crypto Capital Corp, linked to Bitfinex, which would have had a loss with another exchange whose founder scammed and disappeared with client cryptos.
According to Bitfinex, the amount purchased each month is equivalent to at least 27% of the parent company iFinex’s gross revenue for the period.
Given this, LEO closes the semester up almost 50%, at US$ 5.65.
Cryptocurrencies with the highest gains in the first half of 2022 (as of 3 pm on June 30):
|UNUS SED LEO (LEO)||$5.65||+48.21%|
Biggest falls of the semester
On the downside, the worst performer was TerraClassicUSD, formerly known as Terra USD (UST), the algorithmic stalbecoin of the Terra ecosystem. The token crisis began to draw attention between the end of April and the beginning of May, when this token lost its parity with the dollar, helping to put pressure on the entire cryptocurrency market.
Unlike better-known stablecoins such as Tether (USDT) and USD Coin (USDC), which create parity with the dollar through bank deposits, the UST obtained stability through the burning of Luna: for each unit of UST issued, US$ 1 on Luna was withdrawn from circulation. The dynamic was supported by market makers (market makers), who act in the purchase and sale of assets, profiting in exchange for the task of maintaining the UST parity with the dollar.
The crisis began when Tron (TRX) launched a new protocol that offered better yields than what was achieved with UST, but it was with the sharp drop in Bitcoin that followed that the token saw an unsustainable scenario of parity with the dollar.
The UST had entered what is called a “death spiral”, a scenario that involves a systematic and feedback loop of an asset. In this case, investors began to redeem larger and larger amounts in UST with fears that the stablecoin would be worth less and less than $1.
As a result, the system began to issue more Luna tokens, further driving down the cryptocurrency’s price and causing more fear in the market. Not to lose out, Luna investors also began to liquidate their positions, weakening the parity’s fuel again, creating a vicious cycle. The result is that, despite still being among the top 100 cryptos by market cap, today it is worth around $0.05.
The second biggest drop of the year so far, Fantom (FTM) has already lost 90% of its value in a crisis that began in March, when two top developers, Andre Cronje and Anton Nell, resigned from decentralized finance (DeFi) projects. .
The two helped create the cryptocurrency and the exits were interpreted with great fear in the market about the strength of the project to continue, which, combined with the market crisis as a whole, ended up bringing the asset down.
A number of cryptocurrencies followed similarly in the half-year, with at least 24 tokens dropping more than 80%, showing the strength of the current market crisis. However, at the time of publication, the biggest drops were with Curve DAO Token (CRV), Gala (GALA) and Kadena (KDA).
Cryptocurrencies with the biggest drops in the first half of 2022 (as of 3 pm on June 30):
|TerraClassicUSD (USTC)||US$ 0.05075||-94.93%|
|Fantom (FTM)||US$ 0.2456||-90.49%|
|Curve DAO Token (CRV)||US$ 0.6616||-89.35%|
|Gala (GALA)||US$ 0.05305||-88.53%|
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