Capital Retreats – Accident Carriers?

Crypto is in the bear market. The prices of most cryptocurrencies have been moving sideways for months, with a slight downward trend. During the historic crisis of inflation, pandemic and war, in April 2022, many capitals fled the cryptocurrency market, including institutional investors. Almost all sectors are affected. These are the data for NFT and DeFi, for Bitcoin and Ethereum funds.

1. Collapse in the NFT market: Volume falls by 90 percent

“NFT Sales Plunge” headlined the Washington Post this week. The so-called non-fungible tokens are proof of ownership of digital properties on the blockchain, such as music or images.

The market has seen a rapid rise from 2020 to September 2021. Even during this peak phase, critics have spoken of a bubble just waiting to burst. This is exactly what happened: According to the Washington Post, NFT trading volume fell 92% from its all-time high.

A good example of the downtrend is Jack Dorsey’s world’s first tweet NFT. Bought for nearly $ 2.9 million in 2021, it is now nearly worthless.

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The overall trading volume of the largest Open Sea NFT market decreased by 70 percent in February.

At the same time, there are also positive signs. According to a new report from Chainalysis, the number of active buyers and sellers is on the rise. The sale of Metaverse digital land by Bored Ape Yacht Club in early May 2022 generated record sales of nearly $ 2 billion.

You can read a detailed analysis of the NFT report from data service provider Chainalysis here.

2. The DeFi market loses over 20%.

The DeFi sector has also been booming since 2020. DeFi is an alternative and decentralized financial system, open to all who have access to the internet. It brings together a dense network of protocols, decentralized apps and platforms that work with blockchains. Today there are hundreds of services.

With the help of so-called smart contracts, money in the form of cryptocurrencies is programmed in such a way that it performs various functions almost automatically, including for example lending and borrowing. This increases efficiency and takes intermediaries (such as traditional banks) out of the equation.

The total working capital in DeFi is called Total Value Locked (abbreviated TVL). It went from $ 630 million to an all-time high of $ 250 billion, also in November 2021. Since that all-time high, DeFi has lost nearly 20 percent of its assets, up ten percent in April alone.

Currently, the TVL in DeFi is still a proud US $ 205 billion.

3. Institutional investors are withdrawing from Bitcoin and Ethereum funds

According to the weekly report by investment firm Coinshares, a total of $ 339 million in institutional funds came out of Bitcoin in April. The last week of April saw the strongest exodus of institutional investors since June 2021. Most of this happened in Bitcoin funds.

A similar picture emerges for Ethereum: in the last five weeks, almost $ 200 million in institutional funds have come out, ten percent of which in the last week of April alone.

Bitcoin and Ethereum both lost nearly 20% in value in April, according to Coinmarketcap.

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