The crypto market is always on the move. New trends arrive and older ones fade away. Furthermore, there are plenty of external factors that play a role. Some can have an impact on the whole world. Like Russia invading Ukraine.
According to a DappRadar report, the market stabilized again, where mass adaption came to a step closer again. There are some interesting findings in this report. They most certainly affected crypto user behavior. So, without further ado, let us have a look.
What Does the Current Crypto Situation Look Like?
The current crypto situation still looks good, for the long term. However, the war between Russia and Ukraine has affected the world. For instance, the price of metals and energy products went up. For example, the price of gold did well, as did Palladium. On the other hand, the price of gas and oil is becoming a hot issue. Many countries rely on Russia for these two commodities. The Western sanctions also play a big role here.
As a result, many inventors look for less volatile options. In turn, this benefits Bitcoin and stablecoins. Bitcoin dominance is currently on the rise again. In a more general sense, it also has another effect. Countries that have high inflation, tend to be more open to adopting crypto. Many of these countries see crypto as the future of money and this helps mass adaption. All this is according to a Gemini report. Some clear signs that crypto user behavior changed.
Source: Gemini Report
Although there are all these current challenges, there’s still a steady demand for dApps. We also see that Web 3.0 is rising in popularity. The main beneficiary of this is the metaverse. Closely followed by P2E and others. Still, there are challenges for crypto and web 3.0. For example, economical, regulatory, or technical aspects. So, let’s look at some behavioral structures of users in the crypto market.
What Will Affect Regulation for Crypto?
Crypto is finding new homes all the time. It’s spreading all over the Asia-Pacific region. Furthermore, Latin America is opening up to it. Asia is a big market; we find 60% of the world population here. For instance, India has 100 million users. And what about China? There are 1.2 billion Chinese. 750 million of them will start mingling with a CBDC, the digital yuan. The Philippines and Vietnam are leaders in the blockchain gaming field.
In the Americas, the US has 27 million crypto holders. In Argentine, Buenos Aires has a Bitcoin tax plan in the making. So, we see on one side adoption improving. Look at Colombia, Brazil, or Venezuela. On the other hand, regulation is also increasing.
Also, Europe shows a serious interest in Web 3.0 Leading countries include Portugal, France, and the UK. Germany recently crowned itself as the most crypto-friendly country in the world. Even before the war, Ukraine and Russia already could show off a high crypto adoption. That gives them the top spot in global crypto adoption, in percentages of the population. The war only increased their respective percentages. A nice side effect of crypto behavior saw donations of over $60 million for Ukraine.
However, there is also a trade-off. The Web 3.0 growth and its development, plus some recent hacks. Furthermore, Russia potentially evading sanctions with crypto. All this, and more, will lead to more regulation. This will influence crypto psychology. Some are fans of regulations, others aren’t. China is notorious for banning crypto over and over again. India already has some harsh tax regulations in place. The US and Europe are looking into regulation. We could well see a few regulatory changes in 2022.
DeFi vs NFTs
There are many outside factors that influence the crypto markets. The current macroeconomic situation is not exactly stable. This resulted in bearish sentiment. It appears that this hit DeFi the hardest. Q1-2022 saw a one-year low in transactions for the DeFi space. On the other hand, DeFi’s TVL is looking good. Mostly due to the impact of Terra, Avalanche, and Solana.
Moreover, in total contrast to DeFi, NFTs surged during the same Q1-2022. This resulted in ATHs for the number of transactions and trades. There was an impressive 22% increase with 116 million NFT transactions in Q1-2022. It also shows shifts in crypto user behavior.
To top this off, trades increased by 153% compared to Q1-2021. Ethereum’s trades were stable early this year. However, Avalanche and Solana saw their NFT markets grow.
Source: DappRadar Report
We noted another nice growth impulse in blockchain gaming. Transactions are up by 520% compared to Q1-2021. They also took care of 78% of all transactions in this industry. DeFi and NFTs are and remain an important part of the crypto space. Therefore, they play a crucial role in spreading the cryptocurrency culture.
Ethereum Competition Keeps Growing
Ethereum continues to work on the change from PoW to PoS. ‘The merge’ or ‘the docking’ is coming closer. Still, it seems to be close to the now well knows ‘another 6 months’ statement. Maybe Q 4 or during early 2023 it will happen.
In the meantime, this has given plenty of opportunity to all other L1s that want to give Ethereum a run for its money. Solana and Avalanche come to mind. Furthermore, we see L2 solutions like Ronin, Polygon, and Arbitrum taking their piece of the action.
They all beat Ethereum anytime when it comes down to low gas fees and fast and cheap transactions. A perfect environment and conditions for blockchain games. Regular investors can also take advantage here. For once, independent of whales.
This resulted in some interesting stats:
- About a 100% increase on transactions for Avalanche: We compare this to December 2021. It gets crazy if you compare it to a year ago. This shows a stunning 10,500% increase.
- Polygon saw a 2000% transaction increase compared to a year ago.
- Solana saw a whopping 9,700% increase compared to Q1-2021. These numbers are impressive.
- Ethereum saw a drop of 58% compared to Q1-2021: Its growth of volume in NFTs increased. The same counts for the total of DeFi TVL. You win some, you lose some, it seems.
Source: DappRadar report
Consumer Behavior in Cryptocurrency
All of this resulted in changed consumer behavior in cryptocurrency. Cross-chain became and is popular. This leads to lots of token transferring between networks. There’s more than a $50 billion value locked in bridges. As a result, hacking bridges also hit an ATH. Hackers took over $1 billion in Q1-2022.
Developers also find their way more and more to these new chains. Solana, Near, and Cosmos have 3x as many developers compared to a year ago. Polkadot and Solana are close behind Ethereum in several developers.
The Metaverse Growth Is Back on Track
The interest in the metaverse waned towards the end of last year. Meta made its announcement in October. Shortly after that, it went relatively quiet on the metaverse. Metaverse tokens were at an ATH, by now some of them are 80% down. But there’s good news. According to Twitter analysis, the metaverse is gaining traction again. Most interest seems to come from the USA, Indonesia, and Turkey. Up and coming are Nigeria, the Philippines, and Vietnam. Newcomers with an interest include France, Japan, and the UK. Crypto user behavior in these countries is on the move.
What is of interest here, is the trend that brands invest in the metaverse. Nike, Gucci, Dolce, and JPMorgan all have a presence. The list of brands grows every day. Decentraland, Bloktopia, and The Sandbox turn out to be ideal partners.
The war in Ukraine was like a spanner in the machinery. It changed a lot all over the world. For instance, inflation is rearing its ugly head. Of course, it also affected crypto user behavior. DeFi saw a yearly low in transactions. On the other hand, NFTs saw an increase.
Seeing Avalanche, Solana, and other chains do well in this segment shows that there is life besides Ethereum. Blockchain gaming keeps attracting people and the metaverse seems to be on the up again.
However, be ready for more regulation. But the bottom line from the DappRadar report is that the crypto space is moving closer to mass adaption.
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