Key points
- BTC recorded a daily gain of 6.06% on August 23, the second highest since May 20.
- Open interest on BTC pairs fell from $39.03 billion to $26.65 billion, indicating reduced market leverage.
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Bitcoin (BTC) prices and the broader cryptocurrency market surged on August 23, continuing the rally that began in early August. Federal Reserve Chairman Jerome Powell’s dovish remarks at the Jackson Hole Symposium fueled expectations of a rate cut in September, adding to investors’ risk appetite.
According to the latest edition of “Bitfinex Alpha,” BTC recorded a daily gain of 6.06% on August 23, marking the second-highest daily move since May 20, consolidating the return of risk appetite to the markets.
It is worth noting that the rally comes after a period of increased correlation with the stock market since July 12.
However, despite the recent surge, BTC has been relatively weaker than stocks since the capitulation low on August 5. The SPX reclaimed its August 1 high and monthly opening levels on August 15, while BTC only touched the $65,000 mark on Friday.
The second largest daily liquidation of BTC perpetual futures was recorded on August 23, with a loss of $40 million. Total liquidations across all pairs exceeded $140 million.
Open interest in BTC pairs on exchanges hit an all-time high of over $39 billion on March 29, but fell to its lowest level since the all-time high on August 5, dropping to $26.65 billion. This decline suggests a withdrawal of trading activity or a reduction in leverage in the market.
The relatively smaller amount of leveraged long positions in the market explains why funding rates are increasingly negative at prices between $60,000 and $65,000, contrary to March, when BTC saw its highest funding rates ever at similar price levels.
In altcoin markets, the average funding rate across large-cap altcoins currently stands at 8.1% as of August 25, compared to 60-70% APR in March-April.
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