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Bitfinex reports that cryptocurrency market outflows totaled $55 billion in August amid decreasing liquidity.
According to a report from crypto exchange Bitfinex, capital outflows within the cryptocurrency sector amounted to $55 billion in August.
The analysis utilizes the aggregate realized value metric, which assesses the realized capital of Bitcoin (BTC) and Ether (ETH) alongside the total supply from the leading five stablecoins: Tether (USDT), USD Coin (USDC), Binance USD (BUSD), Dai (DAI), and TrueUSD (TUSD). “A thorough examination of the data indicates a notable trend: by early August, the sector began to witness capital outflows,” the report states.
This metric indicates that approximately $55 billion was withdrawn from the cryptocurrency markets over the last month. The capital outflows affected not only Bitcoin but also had repercussions on Ether and stablecoin liquidity. Bitfinex remarked:
“August marked the largest negative monthly candle for BTC since the bear market low was established in November 2022 at -11.29 percent according to Bitfinex Data.”
Aggregate market realized value net position change. Source: Glassnode/Bitfinex
The analysis further highlights the resurgence of event-driven volatility, where specific occurrences can significantly influence prices and overall market dynamics. In August, two distinct events notably affected Bitcoin prices. On Aug. 17, a flash crash led to a sell-off exceeding 11.4% for BTC. Likewise, Grayscale’s partial legal win against the Securities and Exchange Commission on Aug. 29 resulted in a 7.6% price increase within two hours.
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“We believe that while volatility metrics remain low, the liquidity squeeze in the market has enabled isolated events to exert a greater influence on market movements,” Bitfinex stated.
Bitcoin open interest has outperformed the broader cryptocurrency markets due to heightened institutional interest and wash trading on certain exchanges, the analysis notes. Ether futures and options have seen a substantial decline in 2023 compared to prior years, averaging $14.3 billion per day, representing a nearly 50% drop from the two-year average.
Bitcoin open interest across exchanges. Source: CryptoQuant
The open interest for a specific contract, such as Bitcoin futures or options, indicates the total number of open positions. This serves as a gauge of the current investment level in Bitcoin derivatives.
“The trend observed in the derivatives market, especially regarding open interest across both futures and options, reflects these patterns of low liquidity,” Bitfinex wrote.
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