It was another “exciting” month in the cryptocurrency space. Bitcoin has taken a tumble from 12000$ to 10000$ bringing the market as a whole with it with many altcoins down significantly as a result.
It was also another big month for cryptocurrency trading volumes as revealed by CryptoCompares monthly exchange report. The report highlighted many trends within the crypto industry
Spot Volumes are up Massively
highlighted in the report is the news that spot volumes for top-tier crypto exchanges are up 58.3%. Bringing the total to $529 billion in volume across the month of August.
Volume on lower tier exchanges also increased 30.2% to $291 billion. This makes the volume split between higher and lower tier exchanges 64:36 in favour of top tier exchanges. Among the exchanges with the biggest increase in spot volume was Binance which was up 83%.
Derivatives Volume Surge
Volume for derivatives exchanges also increased significantly. Total derivatives volume increased for another consecutive month up 53.6% to $711.1 billion.
This means that derivatives trading continues to hover around 40% of total cryptocurrency trading. Binance again took the cake for the largest individual increase in exchange volume. Their derivatives volume up 74%.
Options Trading Holds Steady
The previous report from CryptoCompare documented the record breaking month for cryptocurrency options trading in the month of July. In the month of August these volumes held steady with down slightly by 0.6% to $4.05 billion.
July was another big month for cryptocurrency trading. Bitcoin rose from its previous months slumber breaking sharply above 10000$ and DeFi had another month of craziness.
It was also a big month for cryptocurrency exchanges as revealed by CryptoCompare’s monthly exchange review. One of the most noteworthy events highlighted is the continued trend of increase in derivatives trading as a percentage of overall cryptocurrency trading.
In June of 2020 derivatives trading represented 38% of overall trading. In July that was 41%. This percentage increase came as overall spot volumes fell 0.5% to just shy of $640 billion while overall derivatives volumes rose 13.2% to $445 billion.
On the 27th of July derivatives also made a new all time high for trading in a day with $46.91 billion being traded in 24 hours. The top 4 exchanges Huobi, Binance, OKEx, and BitMEX represented 90% of this days trading volume.
Some other noteworthy points made in CryptoCompare’s report are the new all time high in options trading on Deribit which recorded new highs in terms of Bitcoin options trading within a single day and over the month.
The new daily trading record tripled the previous one coming in at a new high of $585 million while the new monthly high was set at $4.07 billion surpassing the previous high of $3.06 billion.
Deribit Options Volume
What was also interestingly outlined in the report is that in the same time period options trading on the CME dropped 70.3%.
It’s the year 2020, and things haven’t been well for the entire world, but cryptocurrencies hold on. They are still here, and that speaks loudly for the industry. More coins are created every once in a while, and more money is invested with each passing day.
Cryptocurrencies may not be as popular as in December 2017 when everyone found out about “this new type of money” called Bitcoin. What happened back then was a massive boost for the industry, but not an accurate display of the real popularity of cryptos. Instead, the crypto world continued to make progress, as blockchain and crypto specialists continued to develop new features and technologies to improve the industry.
The result is slow and gradual progress. Consequently, more people are interested in investing in cryptocurrencies. The thing is — some cryptos are just better than others.
If you consider investing in cryptocurrencies in 2020, make sure to check out the cryptos we listed. But before that, let’s take a look at some interesting stats related to bitcoin trading.
Cryptocurrency Stats — The Crypto Sphere Holds On
Here are some statistics that prove how the crypto market is still strong:
Right now, there are 5,573 cryptocurrencies recorded on CoinMarketCap. This means that there are new tokens added to the list almost every day.
Moreover, the current market cap for all cryptocurrencies is $279.1 billion, and the average daily trading volume is $83.7 million.
The top 10 digital currencies make up about 88% of the entire value of the crypto market, with BTC being the most dominant cryptocurrency.
Those who want to trade cryptocurrencies can do it on 300+ available crypto exchanges.
There are many other impressive stats related to cryptos, but not essential to trading. For example, startups based on blockchain technology have managed to raise more than $31 billion. Although ICOs are not as popular anymore, there are still many blockchain-based projects being financed in different ways. Since the middle of 2016, more than 1800 token sales were recorded, especially in 2018, when crowdfunding was popular.
CoinMarketCap Top 4
Bitcoin
Bitcoin is still the most dominant cryptocurrency in the world, and it occupies 64.7% of the entire market cap of all cryptocurrencies, at $180.58 billion. The price of a single BTC is $9819 at the time of writing this text.
Of course, you probably already know that the price is very volatile and fluctuates almost every minute, so it may be completely different when you’re reading this text. However, what probably isn’t going to change is the fact that Bitcoin is the king of all cryptocurrencies. Although many other cryptos, such as Ethereum or Tether, are doing a fantastic job, they are still nowhere near BTC’s popularity.
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Therefore, it’s safe to assume that Bitcoin is still the most popular and most reliable cryptocurrency in the world. If you’re new to the crypto world, investing in BTC is the place where you want to start.
Ethereum
Ethereum has been regarded as one of the most reliable cryptocurrencies for a long time. The sheer fact that it is made to support the Ethereum platform means that people trust it. ETH has also recorded a gradual increase in popularity over the year, and its current market cap is $27.45 billion. As you can see, it’s very popular — but still not nearly even half as popular as Bitcoin.
A single unit of Ethereum costs $246 at the moment. The cryptocurrency reached pick in January 2018, when the price of a single unit was approximately $1300. There was another peak in March 2018, when the price was about $850, but then it fell down to the point where a single unit was a bit more than $90. Since then, Ethereum’s price has been somewhat stable, fluctuating between $100 and $300.
Tether
Tether is the third most popular cryptocurrency in the world. What makes it different from the other two cryptos above is that USDT is a stablecoin. Essentially, it means that Tether is pegged to the value of the American dollar, and 1 USD = 1 USDT. Typically the currency floats between 96c and just over a dollar depending on demand as well as investor sentiment.
What strikes as amazing about Tether is that thousands of investors are interested in obtaining it. The market cap for this cryptocurrency recorded a rapid increase. In April 2017, the cryptocurrency’s market cap was about $59 million. A year after that, it was $2.2 billion. In June 2020, the market cap for Tether is $9.1 billion, as this stablecoin became the third most important crypto in the world right behind Bitcoin and Ethereum.
Ripple
Ripple has always been close to the top, as it has been experiencing growth for the past couple of years. It’s market cap recorded a gradual decline, but that doesn’t change the fact that XRP is the fourth most popular cryptocurrency right now, with a total cap of $8.8 billion. Ripple is cheap to obtain as the total supply is set to 99 billion XRP, with almost half of them already in circulation.
Conclusion: Things Rapidly Change in the Crypto World
If this article was written in 2019 or any previous year, Bitcoin would remain #1 cryptocurrency. Ethereum would make it to this list as well, and the chances are that you would find Ripple or Tether too.
Although things seem to be the same in the crypto world, that’s far from being true. The crypto sphere is changing at a breakneck pace as new coins emerge, and some old ones fall into oblivion. It seems that the top cryptos are unchanged, but they experience ups and downs almost every day, too. Therefore, even if you invest in BTC or any other crypto listed here, you’re making a small gamble, so be extremely careful whole you investing and trading if you want to make a profit.
Bitcoin has had its most poorly performing week since 2018. At the time of writing it has fallen just over 2000$ since the weekly candle opened. However, price only tells us half the story.
People have been quick to put blame for price movements on the launch of the much anticipated Bakkt futures market, or potential drops in hashrate. But now courtesy of the TokenAnalyst we can get valuable data on how large players in the market are moving capital, and in doing so gain insight into their motivations.
When taking a look at the data we will primarily be focusing on both Binance and BitMEX as these were the two exchanges where the most activity took place.
BitMEX
Exchange In and Out Flows for BitMEX
When taking a look at the data for BitMEX we see the large dip in price on the price chart (Top graph) which took us from 9500 to 8500 in one hour. In the following 3 hours after this fall in price on the net in/out flow chart (Bottom Graph) we see just under 8000 Bitcoin deposited.
Binance
Exchange In and Out Flows for Binance
When we inspect the data for Binance we see strong similarities. A dump followed by large amounts of deposits in the proceeding hours. Not quite as much Bitcoin was deposited to Binance as Bitmex. Deposits coming in at 5765 Bitcoin. Nonetheless a very significant amount of Bitcoin.
Tether In and Out Flows for Binance
However, it is important to note that unlike BitMEX, Binance does not purely handle Bitcoin transactions but a multitude of currencies. An important one to Bitcoin is the stable coin Tether. Based on the chart above we can see a huge net outflow of Tether to the value of 35 Million Dollars. This contrasts heavily with the net inflow of Bitcoin to exchanges. We looked further into Tether withdrawal data and we saw similar trends across a number of exchanges. But now we have a dilemma, where is the Tether being sent? That question is currently unclear but whichever market players are harvesting these Tethers they have not deposited them on any other exchange except one. Poloniex, where 10 million were deposited. To put that in perspective Poloniex only does 10 million dollars in total volume a day.
Conclusion
To answer the question we gave at the start of the article. What is the motivation behind these large flows of capital? It is truly hard to know the full story, but one possible suggestion are large quantitative firms who engage in arbitrage where as they make money in price differences across exchanges. Read our article on Alameda Research to get more of an insight into how quantitative trading in crypto works. Another is miners in China whose energy costs have risen selling their Bitcoin for Tether. Nonetheless it is very interesting to see how blockchain is giving us a perspective into how financial markets work beyond just movements of price.
