Anatomy of a Crypto Bear Market

Crypto prices suck, but they don’t matter as much as they used to.

AccessTimeIconMar 16, 2022 at 3:11 p.m. UTC
Updated May 11, 2023 at 5:32 p.m. UTC
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Ever seen “The Revenant”? To my memory, the last crypto bear market was a little like that.

Alejandro Iñárritu’s 2015 Best Picture Oscar nominee is a bleak, grueling retelling of the legend of Hugh Glass, an enduring 19th century American frontiersman who – after being mauled by a bear – embarks on a gory pursuit of his son’s killer. One highlight amid the various scalpings, hangings and human and animal suffering of all kinds comes when Glass survives a snowstorm by taking refuge in the disemboweled corpse of his horse. In another, he cauterizes a toothy neck wound with gunpowder. It’s a rough watch!

This article originally appeared in Valid Points, CoinDesk’s weekly newsletter breaking down Ethereum 2.0 and its sweeping impact on crypto markets. Subscribe to Valid Points here.

Traders in 2018-19 endured a similar death march. The charts speak for themselves (stunning vistas of troughs and valleys are abundant among the few names that survived at all), but in some ways on-chain activity paints an even more desolate picture.

Weekly active Ethereum addresses fell as low as 165,000 in February 2019. Decentralized autonomous organizations (DAO) effectively didn’t exist until Moloch DAO and MakerDAO resuscitated the concept. OpenSea, now a non-fungible token (NFT) powerhouse transacting in the billions of dollars, sold $475,000 in tokens total for the entire 2018 year. Decentralized finance (DeFi) accounted for under a million dollars.

This time around the bear looks a little different, to say the least. Indeed, there’s even some debate as to whether or not we’re truly in a bear market at all: In traditional finance, bear markets are marked by a 20% downturn. In crypto, grizzled old heads will tell you the carnage hasn’t started until your favorite long-term play is down 90% ... and then another 90% when you try to buy the dip.

By those standards, so far the bear market of 2022 looks more like Winnie the Pooh than a proper predator.

Ethereum continues to fizz with activity, with pockets of development, usage and adoption that remain robust – and one could argue might even be stronger than ever – in spite of anemic price action.

Ultimately, it’s a sign of the maturity of the technology. In 2018 the ecosystem was the asset: The only value Ethereum had was the speculative promise of what it could one day become, and to what degree ether (ETH) reflected that promise.

Today, vast swaths of what’s being built on Ethereum are largely agnostic to ether’s price, and in at least one instance may even be inversely correlated. Far from a horrific trek across a desolate, bloody tundra, this bear market features plenty for Ethereans to be excited about.

Let’s take a look:

DeFi defiant

Since the end of January, the aggregate total value locked (TVL) across the DeFi ecosystem has remained in a comparatively tight $210 billion to $190 billion range, despite price fluctuations upwards of 25% in ETH ($3,250-$2,400), and even more volatility from Ethereum Virtual Machine (EVM) compatible chains like Avalanche’s AVAX ($98-$65) and Fantom’s FTM ($2.4-$1.05) during the same period.

This stable rate of deposits roughly confirms the thesis I laid out in early December 2021: Despite having a reputation for being used primarily as a tool for speculation and leverage, DeFi will remain robust even during times of market turbulence – and, indeed, perhaps even in an extended bear market – because of the ample income opportunities afforded to users.

Back then, I was trying to figure out why DeFi was so resilient in the face of a veritable Kubrickian blood-elevator in prices: Bitcoin (BTC) nosedived from $57,000 to $42,000, while ether tanked from $4,600 to $3,500 – all in a matter of hours. And yet, deposits remained healthy.

What experts told me was that as long as yield farmers can reap bumper returns relative to off-chain opportunities, the deposits will stick around. In fact, many yields are actually driven by volatility: Uniswap positions, for instance, feast on high volumes. In some ways, DeFi can actively benefit from blood elevators.

The outlook for traders remains grim, but for those who venture into the fields opportunities abound.

The face of mainstream NFT adoption

In NFT-land volumes and floor prices look anemic compared to 2021 highs, but ultimately the market’s vitals are not those of a patient on life support – not even close.

On the one hand, OpenSea’s Ethereum volumes are set to post an eight-month low. On the other, monthly active users are on pace to narrowly break the all-time high of ~550,000. Not to mention, the overwhelming market leader just closed a funding raise at a $13.3 billion valuation.

Trying to scry floor prices also yields mixed signals. Volumes for popular collections are down as much as 60% on a 30-day basis, and floors for CryptoPunks are also down 50% from their highs. Nonetheless, newcomers like Azukis continue to break into the top-10 charts and sell out with ease.

Mainstream adoption continues at a stunning clip. Nike (NKE) made one of the few acquisitions in its company history when it bought RTFKT, and NFTs are widely reported to have taken center stage at the South by Southwest (SXSW) festival.

Add to all of that a recent report from Nansen shows that NFTs may be inversely correlated to broader crypto markets – a sign they may be emerging as an asset class in their own right.

Cherry-pick from above however you like. I’m assuming the Kotakus of the world will attempt another “NFTs are dead” piece at some point and they have a reasonable case, but I’m personally dubious this all collectively gets put back in the box.

NFTs are leading the adoption charge for crypto, and while the most high-profile new entrants skew older (say, newly unretired quarterback Tom Brady or former New York Times writer Kevin Roose), the demographic coming in is overwhelmingly young and willing to experiment. I don’t think they’re going anywhere.

If NFTs can survive Kevin, they can survive the bear.

DAO sentiment

Finally, when it comes to DAOs, the nascent organizations are widely anticipated to be a hotspot for innovation and development throughout the bear market – and for good reason.

Having prepared for this bear for years, DAO treasuries are likely to emerge as one of the most popular sources of developer funding in the coming months and years. The money is abundant enough that CoinDesk’s own Tracy Wang has wondered if the organizations could replace traditional VC firms.

Money aside, however, here’s my pitch on why DAOs will emerge from the bear stronger than ever: There are dozens, if not hundreds, of tremendously well-capitalized entities that have glaring needs, and instead of waiting for our VC overlords to fund solutions, they can shell out the dough to address those needs themselves.

Huge swaths of that estimated $9.1 billion in treasury funds will go to tooling, and there will be far fewer pain points this time next year.

Cute Lil Grizzly Bear

If any of this strikes our loyal readers as overly optimistic, I don’t blame you! Price action has been sucking wind.

Still, even the most beaten and bloodied trader can’t compare the current bear with the last one. Price action was all that mattered back then; today, even an inexperienced user can deposit funds across a wide range of platforms offering smart contract-based equivalents of most financial services. They can then vote on the future health of those platforms via DAO governance, and I don’t know why they would, but they can even collect cute monkey picture NFTs with the interest on their deposits.

And that’s the opportunities afforded to a casual user – for developers, the options and promise are unending.

The technology has largely delivered on its promise. Put in the most basic terms, the difference between the last bear and this one is that there’s stuff to do, and after a historic bull run there’s money to spend doing it.

This simple fact is a testament to the work believers put in four years ago, and it’s why this trek through the tundra won’t be as grueling.

Pulse check

The following is an overview of network activity on the Ethereum Beacon Chain over the past week. For more information about the metrics featured in this section, check out our 101 explainer on Eth 2.0 metrics.

March 15 - Network Health.jpg
Valid Health 0316.jpg

Disclaimer: All profits made from CoinDesk’s Eth 2.0 staking venture will be donated to a charity of the company’s choosing once transfers are enabled on the network.

Validated takes

  • Ethereum builder ConsenSys raised $450 million at a $7 billion valuation. BACKGROUND: ConsenSys has been a core driver in the development and usage of the Ethereum ecosystem. For instance, MetaMask, ConsenSys’s flagship Ethereum wallet, has reached over 30 million monthly active users, while Infura, a platform created by ConsenSys that provides API services to connect to Ethereum, has over 430,000 developers. The company is reportedly planning aggressive expansion, though looming litigation from disgruntled shareholders may slow it down.
  • The Ethereum Foundation announced the Kiln Merge testnet, which is “expected to be the last merge testnet created before existing public testnets are upgradeable.” BACKGROUND: The Kiln is set to be a successor to the Kintsugi merge testnet, which allowed Ethereum developers to successfully implement stable and robust protocol specifications for the ecosystem. Now that developers, node operators, infrastructure providers and stakers can test on the Kiln testnet, we are closer than ever to a proof-of-stake Ethereum mainnet.
  • A $200 million raise has valued Immutable, a liquidity and scaling platform for NFT’s built on Ethereum, at $2.5 billion. BACKGROUND: The funds will be used toward global expansion, including boosting Immutable Gaming Studio and merger-and-acquisitions activity. Robbie Ferguson, co-founder and president of Immutable, said on CoinDesk’s “First Mover” for March 15, 2022, that Immutable plans to bring blockchain gaming to the masses and reinvent the most important Web 2 companies, especially in social media.
  • Goldman Sachs (GS) is offering clients access to an ether fund through Galaxy Digital, a technology-driven financial services firm. BACKGROUND: Regulatory documents filed last week with the U.S. Securities Exchange Commission show the fund has sold approximately $50 million to clients with a minimum investment amount of $250,000. The bank’s attempt to offer more exposure in ether to their clients demonstrates large institutional demand for digital assets and its ecosystem.

Factoid of the week

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Open comms

Valid Points incorporates information and data about CoinDesk’s own Eth 2.0 validator in weekly analysis. All profits made from this staking venture will be donated to a charity of our choosing once transfers are enabled on the network. For a full overview of the project, check out our announcement post.

You can verify the activity of the CoinDesk Eth 2.0 validator in real time through our public validator key, which is:


Search for it on any Eth 2.0 block explorer site,


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CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk offers all employees above a certain salary threshold, including journalists, stock options in the Bullish group as part of their compensation.

Andrew Thurman

Andrew Thurman was a tech reporter at CoinDesk with a focus on DeFi.

Sage D. Young

Sage D. Young was a tech protocol reporter at CoinDesk. He owns a few NFTs, gold and silver, as well as BTC, ETH, LINK, AAVE, ARB, PEOPLE, DOGE, OS, and HTR.

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