According to a report by crypto exchange Bitfinex, capital outflows in the crypto industry reached $55 billion in August. The analysis is based on the aggregate realized value metric, which measures the realized capital of Bitcoin (BTC) and Ether (ETH) along with the combined supply from the top five stablecoins. The report highlights a prevailing trend of capital outflows since early August. In the past month, about $55 billion was drained from the crypto markets, impacting Bitcoin, Ether, and stablecoin liquidity.
“August was the largest red monthly candle for BTC since the bear market bottom was formed in November 2022 at -11.29 percent as per Bitfinex Data.”
The analysis also highlights the return of event-based volatility, where isolated events can have a larger impact on prices and overall market movements. In August, two isolated events significantly affected Bitcoin prices. On Aug. 17, a flash crash led to a sell-off of over 11.4% for BTC. Similarly, Grayscale’s partial legal victory over the Securities and Exchange Commission on Aug. 29 resulted in a 7.6% price jump within two hours. Bitfinex believes that low volatility metrics, combined with the liquidity crunch in the market, have allowed isolated events to have a bigger impact on market movements.
The analysis further reveals that Bitcoin open interest has outperformed the crypto markets due to increased institutional interest and wash trading on some exchanges. In contrast, Ether futures and options have significantly declined in 2023 compared to previous years. The daily volume for Ether futures and options has seen a sharp decline of almost 50% from the two-year average, reaching $14.3 billion per day.
The open interest of a specific contract, such as Bitcoin futures or options, represents the total number of open positions and indicates the amount of money invested in Bitcoin derivatives. Bitfinex points out that the trajectory observed in the derivatives market, particularly in open interest across both futures and options, aligns with the patterns of low liquidity.
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