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The cryptocurrency industry is expected to be trapped in the ongoing bear market in 2023.
The cryptocurrency market has significantly shrunk in 2022, with over $2.2 trillion liquidated in the past twelve months. According to aggregate data from the block, the daily crypto spot trading volume on all exchanges has dipped below $10 billion for the first time since December 2020. The Terra Luna and FTX collapse are the largest contributors to the 2022 crypto bear market aside from other macroeconomic factors.
As of Wednesday, December 28, the total cryptocurrency market capitalization is at approximately $797 billion, according to data provided by Binance-backed Coinmarketcap. Notably, while the total crypto market volume stands at about $29 billion, stablecoins control the largest share with approximately $27 billion. The total volume in the decentralized financial ecosystem (DeFi) is currently around $2.33 billion, 7.81 per cent of the total crypto market 24-hour volume.
Closer Look at the Crypto Market Outlook
The cryptocurrency market is consequently morphing to accommodate the global economy. Traditional financial institutions and big tech corporations are adopting blockchain technology. Moreover, governments worldwide are working closely with cryptocurrency companies to regulate the industry in preparation for mainstream adoption.
However, the collapse of one of the largest cryptocurrency exchanges by daily traded volume, FTX, has raised concerns on the general state of the crypto market. Furthermore, about 1 million FTX traders and investors have been left stranded following the FTT collapse.
As a result, cryptocurrency traders have migrated en masse from centralized exchanges (CEX) to decentralized exchanges (DEXs) in the past two months. Additionally, non-custodial crypto wallets have recorded tremendous gains in global customers as seen with Binance-backed Trust Wallet and its TWT token.
The non-fungible tokens (NFT) volume has also slumped significantly since April 2022. The Trump Digital Trading Cards (TRUMP), which recently entered the industry at the top position, is currently ranked 42 with a floor price of $179.27, and a 24-hour sales volume of 51.6 ETH.
One of the most hit crypto projects by the 2022 bear market is the Solana (SOL) project, which has dropped approximately $94 per cent in the past year. Notably, the Solana ecosystem was heavily bolstered by the FTX and Alameda network. Furthermore, most of the Solana tokens were listed and traded on the FTX exchange and leveraged with the FTT tokens.
The cryptocurrency industry is expected to be trapped in the ongoing bear market in 2023. Moreover, historical data and current fundamental aspects show more liquidations ahead. As such, market strategists forecast the total trading volume will slump further, thereby leaving more crypto exchanges at risk of bankruptcy.