According to a report published by crypto exchange Bitfinex, capital outflows in the crypto industry reached $55 billion in August. The analysis is based on the Total Realized Value metric, which measures the realized capital of Bitcoin and Ethereum with the combined supply of the five largest stablecoins: Tether (USDT), USD Coin (USDC), Binance USD (BUSD), Dai (DAI) and TrueUSD (TUSD). According to this indicator, about $55 billion has been withdrawn from cryptocurrency markets over the past month. Capital outflows have affected not only Bitcoin, but also the liquidity of Ethereum and stablecoins. “A deep dive into the data reveals a prevailing trend: the industry began experiencing capital outflows by early August,” the report states, “August was the largest red monthly candle for BTC since the November 2022 bear market bottom at -11.29 percent.”
The analysis also points to the return of so-called volatility, which is based on variations in which individual events can have a greater impact on prices and overall market movements. In August, two separate events had a significant impact on Bitcoin prices. On August 17, a flash sell-off caused BTC to plummet by more than 11.4%. Likewise, Grayscale’s partial legal victory against the Securities and Exchange Commission on August 29 saw prices jump 7.6% within two hours. “We believe that while volatility indicators continue to remain low, the liquidity crisis in the market has allowed individual events to have a greater impact on market movements,” Bitfnex said.
Open interest in bitcoin has outpaced cryptocurrency markets thanks to increased institutional interest and “wash” trading on some exchanges, the analysis noted. Ether futures and options fell significantly in 2023 compared to previous years, to $14.3 billion per day, representing a sharp decline of nearly 50% compared to the two-year average. Open interest in a particular contract, such as Bitcoin futures or options, represents the total number of open positions. This is an indicator of how much money is currently invested in Bitcoin derivatives. That is, the trajectory observed in the derivatives market, particularly in open interest in both futures and options, reflects these low liquidity trends.
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