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Crypto Market Resilience Remains Despite Hostile Backdrop: CoinMetrics

Crypto Market Resilience Remains Despite Hostile Backdrop: CoinMetrics

The crypto market and industry have faced many challenges in the past year. Several sectors have grown since the beginning of 2023. Bear markets are still being used to build.

Crypto markets have remained resilient throughout an increasingly hostile environment, according to industry researchers.

External factors, including a U.S. banking crisis and the regulatory war on crypto, have not dampened progress for the crypto industry.

These are the findings from a CoinMetrics State of the Network report on May 31.

Ecosystem Expanding Despite Declining Volumes  

The firm used a classification system for digital assets called Datonomy to derive its findings. This is used to zoom out and “gauge the ecosystem and its underlying trends from a broader lens,” it noted.

“On the back of an eventful five-month period, digital asset markets have displayed remarkable resilience despite encountering challenges.”

The research broke the industry down into different asset classes and sectors, with cryptocurrencies being the largest.

Market Cap by Digital Asset Class. Source: CoinMetrics

The entire ecosystem has expanded beyond just crypto tokens; all sectors have grown this year. And the report postulates that there was likely a lot more growth to come:

Blockchain applications that sit atop smart contract platforms and scaling infrastructure are at a stage of relative infancy in comparison to more mature sectors.”

The research also confirmed that from a trading and investment aspect, volatility and volumes had declined recently.

Despite a 42% gain in the crypto market capitalization, things have been rather sideways over the past two and a half months. Last week, BeInCrypto reported that exchange flows and liquidity has fallen to a new cycle low. CoinMetrics confirmed that spot volumes had declined by 50% since the beginning of the year to less than $20 billion.

Volumes By Digital Asset Class. Source: CoinMetrics

There is also the premise that even at its lowest point during this bear market, the total cap fell to the peak of the last bull market cycle – $830 billion.

The report concluded that despite the pressures it faces, the crypto industry is still growing:

“The ethos of the digital asset ecosystem continues to be embodied by the phrase—’bear markets are for building.’”

Crypto Market Outlook

Markets have turned red this Thursday morning with a 2.1% decline in total capitalization. As a result, it has fallen to $1.17 trillion keeping markets within their range-bound channel.

BTC had dipped to $26,850 at the time of writing, while Ethereum was flat on the day at $1,855.


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