VanEck: Crypto exchange volumes declined to $52b in August 

VanEck’s monthly crypto market recap reveals that trading volumes of centralized exchanges declined to $52.8 billion in August, representing a 15.5% decrease compared to July.

Bitcoin (BTC) and Ethereum (ETH) faced a challenging month, recording 9% and 10% losses, respectively.

VanEck: Crypto markets hit lows

In August, as reported by VanEck, the trading volumes of digital assets hit a two-year low, coinciding with an all-time low in their volatility.

According to the analysis, this decline was attributed to waning investor interest. The analysts attributed the declining investor interest to the allure of beach vacations in the U.S. and the U.S. 10-year treasury bond, whose yield reached its highest level in 15 years in August.

The report also revealed a substantial decrease in venture capital funds allocated to blockchain projects, with only $500 million deployed in August 2023, representing a significant drop from the $1.9 billion and the $2.7 billion recorded in August 2022 and 2021, respectively.

Simultaneously, crypto Exchange-Traded Products (ETPs) also experienced substantial redemptions.

The report also indicated various factors that may have contributed to the negative price action in the cryptocurrency market. Firstly, concerns were raised about the solvency of Binance, one of the prominent cryptocurrency exchanges.

Another noteworthy event was the liquidation of a $200 million position by an individual exploiting vulnerabilities on the BNB DEX Venus, which added to the negative sentiment. Additionally, exploits were observed on fundamental Ethereum DeFi applications like Balance and Curve, further eroding confidence in the ecosystem.

Curve’s heist raised the possibility of liquidating Michael Egorov’s substantial $168 million CRV position, which represented a significant 34% of the total CRV supply, making it a focal point of concern within the crypto community.

Rumors also circulated regarding the potential arrests of executives at Huobi in China and the potential insolvency of the Huobi exchange. These speculations added an extra layer of uncertainty to the cryptocurrency landscape.

Furthermore, Bitstamp’s decision to suspend trading of altcoins for users in the United States also had a noticeable impact on market dynamics during this period. There were also significant outflows totaling $260 million from cryptocurrency ETPs in August, indicating a broader trend of investors exiting the market.

Despite these challenges, it’s important to note that none of the SCPs (Smart Contract Platforms) featured tokens that experienced price increases in August.

Bitcoin and Ethereum experienced losses during this same month, dropping their values by 9% and 10%, respectively. These declines starkly contrasted with the Nasdaq Composite, which saw a relatively modest decrease of 2%. This marked the second consecutive month in which cryptocurrencies underperformed compared to traditional financial indices.

According to researchers, the best-performing assets during this challenging period on the platform were Ethereum, which saw an 11.3% decrease in price, and Tron (TRX), with a more modest decline of 1.6%. 

Conversely, the month’s biggest underperformers included ATOM, with a 21.9% decline; MATIC, down 19.3%; and AVAX, which saw a substantial drop of 22.1%. These numbers underscore the overall bearish sentiment that characterized the cryptocurrency market during the month.

A gloomy August

August unfolded as a turbulent month; many factors, including regulatory developments, smart contract vulnerabilities, solvency concerns, and apprehensions of potential liquidations, buffeted cryptocurrency markets.

The conclusion of July had brought renewed optimism to the crypto sector, thanks to Ripple’s partial victory against the U.S. Securities and Exchange Commission (SEC). 

Grayscale was also seeking permission to transform its Bitcoin Investment Trust into a spot Bitcoin ETF, and there was hope for the approval of other similar ETFs. Additionally, there were hints from the SEC that they might allow the launch of Ethereum Futures ETFs.

However, as August progressed, these hopeful expectations took a disappointing turn. None of the anticipated ETF approvals happened, leaving many disappointed. To compound the uncertainty, the SEC made an announcement that they intended to challenge the court’s decision in the Ripple case. This decision added another layer of doubt and unpredictability to the world of cryptocurrencies.