The bear market of 2022 continues unabated, leaving many to wonder what will happen in the months ahead. The recent joint report by Bybit & Nansen for October highlights some peculiar developments. Overall, the industry is in a good place, even if the prices tell a different story.
Exchange Net Flows Look Healthy
The crucial metric people should focus on is whether people are depositing funds into or withdrawing them from exchanges. Popular metrics by Glassnode depict a healthy BTC outflow during October 2022. The outflows should have yielded lower selling pressure, although that isn’t necessarily apparent. Every time BTC attempts to break above $21,000, it finds itself below $20,000 in the following hours. With lower liquidity on trading platforms, that shouldn’t be so prevalent, but the situation remains tricky.
The findings confirm that October 2022 saw an intensified exchange outflow, resulting in over 111,440 BTC leaving exchanges in 30 days. A substantial amount that is similar to developments in mid-June 2022. Back then, the outflows helped BTC stabilize near $17,000, whereas they now hold the line for $19,000. A similar trend is in place for Ethereum, which noted strong inflows in September but transitioned to outflows in October. That explains why ETH rallied slightly in October, although support levels remain slightly shaky.
Stablecoins continue their contraction throughout October 2022. Similar to June and July, stablecoin supplies continued to dwindle, primarily affecting Tether’s USDT. Less liquidity in stable assets may indicate lower demand for exposure to BTC and ETH, and less alleviation of the ongoing selling pressure. As the supply keeps dwindling, it remains to be seen where the markets will head next.
Solana Slumps And Arbitrum Soars
For on-chain activity, things remained relatively normal for Ethereum, BNB Chain, Polygon, and Fantom. All networks saw activity that is within expectations, although the overall volume has dwindled since June and July 2022. The biggest drop is noted for Solana, although that network suffered from yet another outage in October. Additionally, the exploitation of Mango Markets on Solana disrupted on-chain activities.
On the opposite side of the spectrum, there is tremendous momentum for Arbitrum. It is the leading L2 in October 2022, at least where the Total Value Locked is concerned. Arbitrum stood at over $2.7 billion at the end of the month, well ahead of Avalanche ($1.65 billion). Arbitrum also has close to twice the TVL of Solana, highlighting the benefits of L2 solutions for DeFi over Layer-1 networks.
A Good Start To Q4 2022
Overall, October 2022 has been a healthy month for the crypto industry where metrics are concerned. However, the dwindling stablecoin supply remains a pressing issue, even with exchange outflows accelerating for BTC and ETH.
Despite the price pressure, DeFi activity remains relatively high, particularly on L2 networks. There is no reason to panic by any means, but more uneasy market momentum seems rather likely.
