How Many Crypto Exchanges Shut Down During the 2022 Bear Market?
The 2022 cryptocurrency bear market was a tumultuous period for the digital asset industry, leaving many investors and businesses reeling. One of the key indicators of the market's severity was the number of crypto exchanges that either closed their doors or significantly scaled back operations. While an exact definitive count of exchange closures is challenging to obtain due to the decentralized and often opaque nature of the crypto world, it's clear that a substantial number of platforms faced immense pressure.
Cryptocurrencies have suffered a brutal comedown this year, losing $2 trillion in value since the height of a massive rally in 2025. While there are parallels between today’s market conditions and past downturns, the sheer scale of the losses and the increased regulatory scrutiny made it a uniquely challenging environment for crypto exchanges.
Factors Contributing to Exchange Closures
Several factors contributed to the struggles and eventual shutdowns of some crypto exchanges during the 2022 bear market:
- Decreased Trading Volume: As crypto prices plummeted, trading activity slowed considerably. This directly impacted exchange revenue, which is largely derived from transaction fees. According to the data from SimilarWeb in July cumulative web traffic to cryptocurrency exchanges has decreased by 11%. It is -45% YTD,” tweeted ICO Analytics. This massive drop in traffic meant significantly lower income for many exchanges.
- Liquidity Issues: Some exchanges faced liquidity crises, making it difficult for them to meet withdrawal requests from users. This eroded trust and further fueled the downturn.
- Regulatory Pressure: Increased regulatory scrutiny and enforcement actions added to the burden on exchanges, forcing some to cease operations rather than comply with evolving rules.
- Loss of Investor Confidence: The overall negative sentiment surrounding the crypto market led to a loss of investor confidence, making it harder for exchanges to attract new users and retain existing ones.
- Failures of Related Entities: The collapse of major crypto companies like FTX sent shockwaves through the industry, further destabilizing the market and leading to contagion effects that impacted other exchanges.
Estimating the Number of Exchange Closures
While a precise figure is difficult to pinpoint, industry reports and news articles suggest that dozens of smaller to mid-sized crypto exchanges either closed down or were acquired by larger entities during the 2022 bear market. Many more significantly reduced staff and curtailed operations. The impact was felt globally, with exchanges in various countries facing similar challenges.
The Lingering Effects
The closure of crypto exchanges had a significant impact on the broader crypto ecosystem. It led to losses for users who had funds held on those platforms, further eroding trust in the industry. It also highlighted the importance of due diligence when choosing a crypto exchange and the need for greater regulatory oversight.
Moving forward, the crypto industry must learn from the lessons of the 2022 bear market and work towards building a more resilient and transparent ecosystem. This includes strengthening regulatory frameworks, improving risk management practices, and prioritizing user protection.