Recent trends in the cryptocurrency market


Cryptocurrencies (or cryptos) are private digital currencies used as a means of payment or exchange and a store of value, and to power decentralised finance (DeFi) software projects on blockchains. Cryptos are global in nature and are mostly secured via decentralised computer networks, operating differently from fiat currencies such as INR, USD or GBP.

The term cryptocurrency was coined after several coins/cryptos entered the global market, the first being Bitcoin, launched in 2009.

According to Augusta Free Press, the number of cryptos dropped to c.10,000 globally in August 2022 from c.10,400 in February 2022. However, the exact number of cryptos trading in the market remains undetermined — the crypto market capitalization (MCap) aggregator has 22,140 listed coins, while has 12,862.

The top five cryptos (by MCap as of December 2022), which cover 75% of the market, are Bitcoin (BTC), Ethereum (ETH), Tether (USDT), USD Coin (USDC) and Binance (BNB).

The crypto market has witnessed significant swings, especially during the past one to two years. Below, we look at some of the factors that led to these fluctuations.

Historical performance of the crypto market

The global MCap of the 12,862 cryptos tracked across 623 exchanges by CoinGecko recorded a CAGR of c.12.9% during December 2013-December 2022.

Factors impacting the market

While the pandemic did impact the growth of the crypto market, it was able to recover from the crisis, realising MCap of more than USD2tn at the start of 2022. However, the market has been shrinking again, reaching levels below USD900bn as of mid-December 2022.

Some of the factors that support or adversely impact growth in crypto prices and MCap are discussed below:

  • Sudden market movements: The Luna-Terra crash led to severe instability in the crypto market, with the TerraUSD and Luna dropping c.80% in May 2022, turning almost worthless. This has created fear among investors, and even aggressively bullish crypto investors are now apprehensive

Recent events shaping the crypto market

1. The Ethereumtransition

The second-largest crypto, ETH, underwent a significant transformation when it changed its technology from a proof-of-work (PoW) protocol to a proof-of-stake (PoS) system. This transition, called ‘the Merge’, is expected to cut ETH’s carbon emissions; however, it has affected the growth of both ETH and the overall crypto market.

  • Cons

Although crypto markets saw a slump after the completion of the Merge, market experts believe that it is a significant step towards the future usability of cryptos. While the Merge may not directly affect BTC and other cryptos, it may underpin the future of all crypto assets, given the growing focus of the financial industry on greener options.

2. US Federal Reserve (US Fed) rate hikes

While the US Fed is slowing interest rate hikes, its continued increases have put immense pressure on the crypto market, with MCap falling c.2.1% to USD907.3bn in September 2022. A continued increase in the rates would pose considerable headwinds for crypto assets going forward. In addition, the reactions of stock markets to the rate hikes have seen a positive correlation with reactions in the crypto market.

3. Top cryptos losing value

In 2022, BTC prices fell 75% to c.USD17,000 from an all-time high of USD69,000 in November 2021. Likewise, ETH prices dipped over 70%, coming in at c.USD1,200 as against its value of USD4,900 in November 2021.

4. Bankruptcy of exchanges and international risk of crypto loan defaults

FTX, a major crypto exchange based in the Bahamas, and its US branch FTX.US filed for bankruptcy in November 2022. Its founder Sam Bankman-Fried is currently facing fraud charges related to the use of c.USD10bn of customers’ funds. The fallout of FTX’s collapse may hit several other crypto firms, as their platforms have started witnessing large outflows.

In addition, defaults from miners on machine-backed loans have been rising owing to falling BTC prices and soaring energy costs.

Future of the market

After the crypto crash and other market conditions led to fear among investors in 2022, concern about the future of cryptos has grown. However, predictions still weigh in positive and negative possibilities, some of which we look at below.

  • According to The Times of India (TOI), the next halving event for BTC is scheduled to occur in April 2024


The crypto market had seen substantial investments and returns until 2021. However, it is currently witnessing a major upheaval owing to the factors we discussed earlier. With many of these conditions likely to persist over the near term, the market is swamped with varying predictions. While some analysts suggest that the market could decline further owing to volatility in macroeconomic conditions and stock prices, inflation and a possible recession that could last until 2024, some researchers are much more optimistic about the future of cryptos.

How Acuity Knowledge Partners can help

Acuity Knowledge Partners has 20 years of experience in supporting many of the world’s leading investment banks, commercial banks and advisory firms. We are well equipped to help the investor community undertake research activities across different asset classes, including cryptocurrencies. Our analysts (MBAs, chartered accountants, CFAs) and credit analysis, compliance and investment banking experts function as an extension of the client teams by helping companies in the credit space globally, offering a wide range of solutions including portfolio monitoring, financial modelling and valuation, financial spreading, risk identification and mitigation and market research.

About the Author

Anurag Jain is part of the Private Equity & Consulting team at Acuity Knowledge Partners. He has 9+ years of experience in research, and currently supports private equity clients with research assignments including initiation and thematic reports, economic updates, data research and company presentations. He holds a Master’s degree in Finance

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We write about financial industry trends, the impact of regulatory changes and opinions on industry inflection points.

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We write about financial industry trends, the impact of regulatory changes and opinions on industry inflection points.