Key Points
- BTC recorded a daily gain of 6.06% on August 23, its second-highest level since May 20.
- Open interest for BTC pairs decreased from $39.03 billion to $26.65 billion, indicating a decrease in market leverage.
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Bitcoin (BTC) prices and the broader cryptocurrency markets surged on August 23, continuing a recovery that began in early August. Federal Reserve Chair Jerome Powell’s dovish comments at the Jackson Hole Symposium raised expectations of a September rate cut, increasing investors’ risk appetite.
According to the latest edition of “Bitfinex Alpha”, BTC recorded a daily gain of 6.06% on August 23, the second-highest daily move since May 20, solidifying the return of risk appetite to the market.
What’s notable is that this rally comes after a period of increased correlation with the stock market since July 12.
However, despite the recent surge, BTC has underperformed stocks relative to its capitulation low on August 5. While the SPX recovered its August 1 high and monthly open on August 15, BTC only reached $65,000 on Friday.
The second largest daily short liquidation of BTC perpetual futures occurred on August 23, when $40 million was wiped out. Total liquidations across all pairs exceeded $140 million.
Open interest for BTC pairs across exchanges hit an all-time high of over $39 billion on March 29, but has since fallen to $26.65 billion, the lowest level since the all-time high on August 5. This decline suggests a withdrawal of trading activity or a reduction in leverage in the market.
The relative lack of leveraged long positions in the market explains why funding rates are increasingly negative between $60,000 and $65,000, while in March, BTC recorded its highest funding rate in history at similar price levels.
The average funding rate for large-cap altcoins in the altcoin market is 8.1% as of August 25, down from 60-70% per year in March and April.
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