Important Crypto Statistics for 2022
2022 is off to a bit of a wobbly start as far as the crypto market price action goes, but a wise person once said…
When in doubt, zoom out.
Let’s take a look at a few things that we should know going into 2022.
Money Supply: Up & To the Right
As you can see from the graph below, global money supply seems to be having a secular bull run. Lest we get too complacent, consider that inflation is running hot and global central banks are under pressure to reduce the rate of growth and even (gasp!) hike interest rates.
This is not the ideal macroeconomic environment for risk assets, which include crypto. However, global central banks know that ALL risk assets — as in stock markets that tend to sustain retirement and sovereign wealth funds — depend on a diet rich in liquidity. When we look at the trend over the last 20 years in the chart below, the impulse to keep the taps flowing is strong.
And also consider that even if global money supply plateaus, there is still the matter of increased adoption. Let’s look at that next.
Adoption & Activity
The last few years have felt like a volatile rollercoaster ride for cryptoassets. And if you look at the linear scale, it looks that way too.
Total market cap today is at a modest $2T (as a point of reference gold = ~$10T). However, if we put the measure on a logarithmic scale instead of a linear scale, we can see that cryptoassets are following a much more orderly path of growth.
Looking at crypto transactions per day also on a logarithmic scale, and on a 30-day moving average to smooth out the day-to-day “noise,” we also see a healthy adoption that has been growing steadily. The drawdowns don’t look nearly as dramatic on a log scale. In fact they look completely normal and we should keep this long-term log perspective in mind.
Thinking about how much value changes hands every day in crypto, we can see below a daily snapshot (in billions $USD) for the top ten cryptoasset exchanges.
To clarify, this is $55.57B USD in 24 hours on January 10, 2022.
DeFi Total Value Locked
Looking at DeFi (Decentralized Finance) as a sub-segment within crypto, it seems the wind has gone out of its sails since November 2021. But if we zoom out again, over the last twelve months the trend is upward.
Notice a big spike at the beginning of January, and at press time we are hovering at around $96B USD in total value locked. In a yield-starved world, it’s no wonder people are curious to experiment with DeFi offerings, and I wouldn’t place any bets on competing yields anytime soon.
Within DeFi, Curve offers convenient cross-asset swaps and leads the pack. Here’s a chart with a mid-January snapshot of total value locked for the top 10 protocols. (You can click the image to go to today’s stats.)
While we’ve seen hedge funds dip their toe into crypto assets, they haven’t jumped in with both feet yet. Some of this hesitation is likely due to regulatory uncertainty. On the other hand, seeing any amount of hedge fund crypto purchases is a sign of normalization as the asset class becomes more established.
We’ll likely see much more activity in the years to come.
NFTs (non-fungible tokens) might be the crypto sector that surprisingly took the world by storm.
Most widely known as collectible artwork with unique blockchain ownership, I’d assert this is the tip of the iceberg for NFT adoption, and early days yet.
Given their unique blockchain IDs, NFTs are set to become better digital versions of membership/loyalty cards, community-building currency, and even financial collateral.
Now take a look at the NFT total market cap — looks pretty crazy on a linear scale, and likely more sustainable if it were an exponential chart.
The leaderboard of top NFT projects changes every day, but just for grins here are the top 10 NFT projects by daily volume on January 13, 2022. To check more recent stats just click on the image.
And get ready to see some crazy floor prices!
Crypto Crime: Still Mostly Hype
Can we just put all the “crypto is for criminals” nonsense to bed already?
To begin with, the actual % is minimal. And to top it off, the general trend over the last five years is decreasing. Because all transactions are recorded forever on the public ledger of the blockchain, sophisticated tools like Chainalysis can help track individual transactions pretty accurately.
This means that most crime happens in places where it can actually hide, like (ahem) cash.
Speaking from a macro view, the year ahead is not without risks given central banks’ inclination to taper liquidity and possibly even hike rates. We shouldn’t expect a repeat of 2020. On the other hand, we should consider that if and when the market throws a tantrum, central banks will most likely reverse course and resume business as usual.
This could provide an excellent opportunity on multiple fronts:
- Markets can let out some steam by reducing excessive leverage.
- Crypto markets can use a period of price consolidation to find meaningful price floors.
- A bull run can resume much more sustainably.
- Enthusiasts may enjoy a great “buy the dip” opportunity.
So while the macroeconomic environment is very different to last, there’s no reason to be concerned if you’re playing the long game.
Did I miss any good macro charts? LMK on Twitter. 🙂