Crypto market highlights: Quick recap of Bybit X Nansen’s report for May 2022

Fear and immobility have enveloped the global financial markets, and the path to recovery may take a while. Meanwhile, Bitcoin (BTC) climbed 1% to $30,414 after gaining a little traction over the last week.

A new report from Bybit, the world’s fourth-largest crypto derivatives exchange, and blockchain analytics firm Nansen sheds insight on the market’s seemingly unstable circumstances. The following are some of the most important findings and takeaways:

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Cryptocurrency market cap reaches July 2021 levels

In the wake of the latest sell-off during the second week of May, the market cap of cryptocurrencies hit levels corresponding to July 2021.

The chaos might be due to investors’ risk-averse mindset at the beginning of April 2021. Moreover, during April and mid-May, Bitcoin (BTC) had a highly positive correlation with the Nasdaq Component. A part of the decline could also be attributed to the meltdown of U.S. tech stocks.

In addition, the increased engagement of traditional institutions has proved to be a double-edged sword so far. As these traditional institutions begin to de-risk, the cryptocurrency market faces increased selling pressure.

Stablecoins capital outflow

Stablecoins saw net exchange outflows of $3,281,561,264 in March and $2,188,589,266 in April. In contrast, the number of stablecoins entering exchanges during May increased. This might indicate investors’ interest in buying the drop or hedging their holdings using derivatives.

Moreover, the stablecoin supply has shrunk lately, indicating that the present wave of selling-off may be here to stay, implying capital withdrawal from the cryptocurrency field.

Declining total value locked (TVL) on DeFi chains

In terms of TVL, the market peaked in November 2021 and has since been declining. Like the market cap, TVL values in the broader cryptocurrency market plummeted to July 2021 levels.

However, most chains are maintaining their strength and processing comparable volumes of transactions compared to the same period last year.

Due to Terra’s downfall, the TVL levels saw a sudden adjustment on May 7. This reversed the trend of decreasing Ethereum (ETH) dominance from the beginning of 2021.

Ethereum, BSC, and Tron (TRX) profited the most from this upheaval, as their market shares increased by 8.4%, 1.5%, and 1.4%, respectively, after the collapse.

Moreover, protocols such as MakerDao (MKR), Uniswap (UNI), and Aave (AAVE) surpassed their counterparts. These protocols are mostly built on Ethereum, which explains Ethereum’s rising market share.

Avalanche (AVAX) overtakes Ethereum (ETH) in total transactions

Avalanche (AVAX) maintained a high volume when sorted by bridge volume over the last 30 days as of 16 May. Compared to Ethereum (ETH), the daily transaction volume on the Avalanche network increased significantly.

Despite bearish market circumstances in April, Avalanche continued to conduct an average of 800,000 transactions each day.

Nonetheless, a number of other bridges, such as Fantom and dYdX, witnessed significant declines in volume and number of depositors.

NFT markets following the lead

Social NFTs such as BAYC, CloneX, and Azuki maintained their market domination with a staggering 83% market share of 4.13 million ETH. In contrast to the total NFT market cap, metaverse and Gaming NFT trends have been on a sustained consolidation.

However, volume, transactions, and the number of users each week continue to rise compared to most weeks in 2021. Despite generally bearish market circumstances, mainstream NFT usage continues to expand and greatly outpaces other sections of the cryptocurrency sector.