Cryptocurrency industry capital outflows hit $55 billion in August, report shows freed Provided by cryptocurrency exchange Bitfinex.
The analysis is based on the Total Liquidated Value metric, which measures the liquidated capital of Bitcoin (BTC) and Ethereum (ETH), as well as the total supply of the top five stablecoins: Tether (USDT), USD Coin (USDC), Binance USD ( BUSD), Dai (DAI) and TrueUSD (TUSD). “A deeper dive into the data reveals a general trend: By early August, the sector had begun to experience capital outflows,” the report states.
According to this metric, the cryptocurrency market has lost approximately $55 billion in the past month. Capital outflows not only affect Bitcoin, but also the liquidity of Ethereum and stablecoins. Bitfinex said:
“August was BTC’s largest red monthly candle at -11.29% since the bear market bottom formed in November 2022, according to Bitfinex data.”
The analysis also points to the return of so-called event-based volatility, where isolated events can have a greater impact on price and overall market movements. In August, two isolated incidents had a significant impact on Bitcoin prices. On August 17, a flash crash caused BTC to sell off more than 11.4%. Likewise, Grayscale scored a partial SEC legal victory on August 29, resulting in a 7.6% price increase in two hours.
“We believe that while volatility indicators continue to be low, tight market liquidity allows isolated events to have a greater impact on market movements,” Bitfnex said.
The analysis noted that Bitcoin open interest outperformed the cryptocurrency market due to increased institutional interest and wash trades on some exchanges. Compared with previous years, Ethereum futures and options fell sharply in 2023 to $14.3 billion per day, a significant drop of nearly 50% from the two-year average.
Open interest for a specific contract (such as Bitcoin futures or options) represents the total number of open positions. This is a measure of how much money is currently invested in Bitcoin derivatives.
“Movements in the derivatives market, particularly open interest in futures and options, reflect a pattern of low liquidity,” Bitfinex wrote.
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