In August, the crypto industry witnessed capital outflows totaling $55 billion, as stated in a report by the crypto exchange, Bitfinex.
The report is grounded on the aggregate realized value metric, which calculates the realized capital of Bitcoin and Ether, combined with the supply from the top five stablecoins: Tether, USD Coin, Binance USD, Dai, and TrueUSD. The report highlights a dominant trend: “By early August, the industry started to observe capital outflows.”
Based on this metric, approximately $55 billion was withdrawn from the crypto markets last month. This not only affected Bitcoin but also influenced Ether and stablecoin liquidity. Bitfinex noted:
“August recorded the largest monthly decline for BTC since the bear market nadir in November 2022, with a decrease of -11.29% according to Bitfinex data.” The analysis also indicates a resurgence of event-based volatility, wherein isolated incidents can significantly affect prices and overall market movements. In August, two separate events notably impacted Bitcoin prices. On August 17, a sudden crash led to an over 11.4% sell-off for BTC. Conversely, Grayscale’s partial legal win against the Securities and Exchange Commission on August 29 resulted in a 7.6% price surge within two hours.
“Although volatility metrics remain low, the market’s liquidity crunch has enabled isolated events to exert a more substantial influence on market movements,” Bitfinex commented.
The analysis also notes that Bitcoin open interest has outpaced the crypto markets due to heightened institutional interest and wash trading on certain exchanges. In contrast, Ether futures and options have significantly decreased in 2023 compared to previous years, plummeting to $14.3 billion per day, a drastic reduction of nearly 50% from the two-year average. Open interest, representing the total number of open positions in a specific contract such as Bitcoin futures or options, indicates the amount of money presently invested in Bitcoin derivatives.
Bitfinex stated, “The patterns observed in the derivatives market, especially in open interest across both futures and options, reflect these low liquidity trends.”
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