December’s crypto market slowdown became a full downturn in January. DeFi activity shrunk while the prices of BTC and ETH dropped. However, one asset grew faster than ever.
According to Footprint Analytics, DeFi‘s TVL failed to exceed $300 billion, instead dropping to $204.79 billion, a 22% decline MoM. BTC and ETH crashed again, while NFT market volume soared to a new high in January, up 239%.
BTC, ETH Crash Again, Top Protocols Liquidated $425 Million
The price of BTC fell 17.3% from $46,472 to $38,430 in January. ETH fell 27.4% from $3,695.6 to $2,684.75, with the highest daily trading volume of the month at $29.31 billion. On the 22nd, BTC and ETH set eclipsed their September 2021 low.
The crash was mainly influenced by policy announcements from various countries. Examples include the Federal Reserve’s tightening of monetary policy, the Bank of Russia’s proposal to ban the use of cryptocurrencies, Pakistan’s ban on cryptocurrency, and other countries’ strict regulation of BTC, from mining and trading to online marketing.
Footprint Analytics – Price & Trading Volume of BTCFootprint Analytics – Price & Trading Volume of ETH
As BTC and ETH prices fell, it drove top lending protocols such as AAVE, Compound, and MakerDAO to trigger massive liquidations around Jan. 7 and 21, with $425 million liquidated.
Footprint Analytics – Liquidation Amount of BTC by ProtocolsFootprint Analytics – Liquidation Amount of ETH by Protocols
DeFi TVL decreased 22% MoM
Due to the overall decline in the cryptocurrency market, TVLs fell 22% in January from $264.22 billion to $204.79 billion MoM. Data from Footprint Analytics shows, the TVL of bridge projects increased by 30% , which did not contribute much to the overall DeFi TVL increase due to its small percentage.
Footprint Analytics – TVL of DeFiFootprint Analytics – Market Share of TVL for Categories
Fantom’s TVL Hits Record High in Blockchain
Blockchains are competitive and each has its own way to capture the market. In January, Terra’s TVL had overtaken BSC several times as the 2nd place. But at the end of the month, BSC overtook it to regain second place.
Footprint Analytics – TVL for Binance & Terra & Fantom
Fantom’s TVL reached a historical high on Jan. 25, locking in $8.9 billion at a 93% growth rate, jumping past Avalanche ($8.62 billion), Solana ($8.07 billion) and Polygon ($4.67 billion) to the top 4.
Footprint Analytics – Market Share of TVL For Chains
Fantom’s TVL hit an all-time high for the following reasons：
Fantom is a faster (1-2s per transaction) and much less expensive (about $1 for 10 million transactions) alternative to the Ethereum networkFantom has a rich ecosystem with yield, dex, and lending projects making up more than 23% of the ecosystem, with Scream and SpookySwap contributing the largest growth in TVL.Scream supports depositing and lending of WBTC, WETH, WFTM, DAI, USDC, fUSDT, providing more liquidity.SpookySwap offers APY above 100% to attract more users.
Curve is Still Far Ahead
Curve is the number one DeFi platform by TVL and focuses on trading stablecoins. The drop in BTC price has driven other cryptocurrencies like ETH down, but has had relatively little impact on the prices of stablecoins like USDT and USDC.
The top 5 positions continue to be held by popular projects such as Maker DAO, AAVE and Convex Finance.
Footprint Analytics – TVL by Protocols
NFT Monthly Volume Hits Record High of $8.52 Billion, Up 239%
With token prices falling due to the regulatory environment, speculative capital flowed into the NFT market for collectibles, games and art. This led to unprecedented activity in the NFT space, with trading volume reaching a new high of $8.52 billion.
Footprint Analytics – NFT Monthly Trading Volume
According to Footprint Analytics, Meebits saw a spike in transactions between Jan. 11 and 21, with volume reaching $200 million to $350 million. Meebits is a 3D virtual world game by Larva Labs, the development team of Cryptopunks. The second most traded NFT project was Terraforms, and the third was Loot.
Footprint Analytics – Top 10 NFT Trading Volume in JanuaryScreenshot Sourcemeebits Website
Veteran NFT collections such as Bored Ape Yacht Club, Cryptopunks, Art Blocks, and Axie Infinity had a relatively stable daily trading volume.
Monthly investment volume down 38% MoM
The number of investments in January was down 55% MoM and the amount invested was down 38%. In terms of investment sectors, the DeFi sector had the lowest decrease compared to December, while the NFT and Web3 sectors had the highest decreases, 66% and 70%.
Footprint Analytics – Funding Monthly Investment TrendFootprint Analytics – Funding Monthly Investment by Category
Summary
Influenced by new policy proposals and regulations, the crypto market entered a downturn in January. Mainstream cryptocurrency prices fell, with BTC and ETH hitting lows. DeFi’s TVL fell 21% MoM, implying a strong correlation with the biggest tokens.
However, the decline in ETH prices has contributed to NFT trading, prompting speculative capital to flow into the NFT markets for collectibles, art and gaming.
January Events Review
Nations
Pakistan’s FIA freezes 1064 bank accounts used to trade cryptocurrenciesIsraeli Defense Minister confiscates over $800,000 in cryptocurrency to fund military activitiesBTCS becomes the first Nasdaq Listed Company to pay dividends in BitcoinState Bank of Pakistan decides to ban cryptocurrenciesPakistan Telecommunications Authority ordered to block more than 1,600 encrypted websitesWhite House wants to make crypto rules a national security issueUruguay Installs its first cryptocurrency ATMItaly’s Banca Generali Bank to allow BTC purchases early this year
Fundraising
British Digital Bank Monzo completes a $600M financing with a valuation of $4.5B. Tencent and Others participate in the investmentSolana horse racing chain game DarleyGo completes seed round financing, Jump Capital leads the investmentA16z leads additional $25M round for DeFi credit protocol GoldfinchBritish Fintech PrimaryBid close to finalizing $150M funding from softBankFireblocks closes $550M Series E at $8B valuationA Subsidiary of the Navier Group is launching a $100M fund for Metaverse creatorsFootprint Analytics raises $1.5M to build accessible Cross-Chain Analytics Tool, led by IOSG
Blockchain
Polygon (MATIC) schedules Long-Awaited EIP-1559 upgrade for next weekNyan Heroes, a Solana-based game project, has partnered with YGGThe 24-hour transaction volume on the Fantom chain exceeds that of EthereumTether has recovered $87M in USDT sent to wrong addresses since its launch
DeFi
Convex Finance’s TVL exceeds $20BThe total Market Value of cryptocurrencies fell to $1.8T, and BTC once fell below $36,550Cross-chain Bridge protocol Multichain joins SkyLaunch allianceBitcoin Nouveau Riche are flocking to Puerto Rico for big tax savingsCrypto investment agency Pantera’s assets under management reach $5.6B
NFTs
Samsung to provide ‘NFT Aggregation Platform’ on its smart TVYGG has raised $1.4M to help typhoon victims in the PhilippinesPudgy Penguins NFT project ousts founders as mood turns icyOne day after launch, OpenSea competitor LooksRare sells over $100M in NFTsThe total transaction volume of LooksRare in the NFT market exceeds $1BJanuary NFT monthly transaction volume hit a new high of $6B
Security
The Solana Network encounters a short-term failure resulting in performance degradationLCX loses $6.8M in a hot wallet compromise over Ethereum blockchainAnimoca Brands’ Lympo NFT platform hacked for $18.7MRaricapital suffered serious price manipulation; Paidun said the stolen funds are now $250,000DEX Crosswise was hacked for $879,000Decentralized lending protocol Qubit hacked, losing about $80M
Feb. 2022, [email protected] — Data Source: Footprint Analytics –January 2022 Report Dashboard
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