Crypto Sell-Off Wipes $700B From Industry Market Cap So Far in 2022

The market value of all cryptocurrencies has plummeted to $1.6 trillion from $2.3 trillion at the start of the year, according to CoinGecko data.

AccessTimeIconJan 24, 2022 at 7:59 p.m. UTC
Updated May 11, 2023 at 6:40 p.m. UTC
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Cryptocurrencies are deep in the red this year after industry market capitalization plummeted to $1.6 trillion as of Monday from $2.3 trillion at the start of 2022, a decline of about 30% in just over three weeks.

According to data from CoinGecko, nearly $700 billion of value has been erased when the market correction sent bitcoin (BTC) down 28% for the year to date and ether (ETH) fell 40%.

The new figures imply cryptocurrency market capitalization has roughly halved since its all-time high around $3.1 trillion in November.

Cryptocurrency market capitalization through Jan. 23 (CoinGecko)
Cryptocurrency market capitalization through Jan. 23 (CoinGecko)

“Crypto winter” flashback

It's not unusual for highly volatile cryptocurrencies to experience swift and devastating drawdowns with magnitudes exceeding 50%.

In April 2013, the price of bitcoin rallied to a high of $230 from just $13 in January. Within days, bitcoin suffered a steep drop to $68, a decline of 70%.

The last crypto bull run in 2017-2018 saw a similar pattern – a swift, parabolic price pump, then a steep drawdown within subsequent weeks.

During the 2018 sell-off, crypto market capitalization plummeted from a high of $850 billion in January to $130 billion in December, a staggering decline of 85%.

It took three years for bitcoin to return to its 2017 all-time high, marking a painful period veteran HODL-ers remember as “crypto winter.”

While the drawdowns vary in magnitude with each subsequent crypto cycle, it appears the "supercycle" hypothesis – that crypto is on the verge of mass adoption – floated by some traders last year is dead in the water.

Pockets of safety

For some traders, the emergence of major altcoins in the current cycle appears to be providing some reprieve from the sea of red.

As the cryptocurrency space matures, bitcoin and ether dominance has been on the decline, meaning altcoins are making up a larger chunk of the broader cryptocurrency market cap.

Tokens such as Fantom’s FTM (-21% year to date) and Cosmos’ ATOM (-7%) have outperformed both bitcoin (-28%) and ether (-40%).

Traders who were long FTM and ATOM and hedged positions with short selling on BTC or ETH were still able to make profits. Short selling occurs when an investor borrows a security (or in this case a cryptocurrency), sells it on the open market and expects to buy it back later for less.

Meanwhile, some of 2021’s hottest tokens such as Polygon’s MATIC (-44%), Solana’s SOL (-51%) and Avalanche’s AVAX (-48%) have notched steep losses in less than a month.

There’s one thing weary traders can look forward to now: the next cycle.

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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 Block.one; 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.

Tracy Wang

Tracy was the deputy managing editor at CoinDesk. She owns BTC, ETH, MINA, ENS and some NFTs.


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