Crypto Market Shaken by Unprecedented Liquidation Cascade Revealed in Report

August saw a significant downturn in the crypto markets, marking the worst month for the industry since Bitcoin hit its bottom in November 2022. Initially attributed to a summer slump, the market decline intensified as liquidations surged in the derivatives market, causing a 7.3% drop in Bitcoin’s value and a 6.9% decrease in Ether’s value. Despite Grayscale’s court victory providing temporary relief, the prices soon returned to their starting levels at the beginning of the month. This sharp decline triggered one of the largest liquidation events in crypto, resulting in over $1 billion in losses when Bitcoin‘s price fell to $26,000 (Yahoo Finance).

In addition to the market downturn, the blockchain industry also witnessed a decline in venture capital (VC) investment. In August, VC investment inflows dropped by 42.7% compared to July, bringing in only $401.9 million across 77 deals. This decline follows a steady decrease in investment since May (Cointelegraph).

Analyzing the performance of various sectors within the digital asset space, Cointelegraph Research’s “Investor Insights Report” provides a comprehensive monthly round-up of all things crypto. It covers topics such as venture capital, derivatives, decentralized finance (DeFi), regulation, and mining, among others (Cointelegraph Research Terminal).

Venture capital investment in the blockchain industry has been declining since Q2 of 2022, hitting a new low in 2023 with $401 million invested in August. Infrastructure projects dominated with 18 individual deals and $107 million in funding, followed by centralized finance (CeFi) with $100 million across three deals. However, it’s important to note that investment in this sector tends to lag behind market sentiment, indicating potential future investments as market conditions improve. Notably, venture capitalist Tim Draper emphasized the value of investing during market downturns, highlighting the opportunity to find quality projects that can thrive in the next bull market (Cointelegraph Research).

On August 25, the expiry of $1.9 billion in monthly Bitcoin options generated speculation in the markets. Although Bitcoin’s price did not experience a significant change during this period, excitement arose with the news of the SEC’s court ruling against Grayscale, which opened the possibility of a spot Bitcoin ETF in the future. However, the price surge to $28,000 was short-lived and retraced back to the $26,000 level. Despite the temporary nature of the pump, the $26,000 range is displaying signs of market support (Cointelegraph).

Cointelegraph’s Research department comprises a team of industry experts with extensive experience in traditional finance, business, engineering, technology, and research. Their expertise enables the team to provide accurate and insightful content in their latest Investor Insights Report (Cointelegraph Research).

Disclaimer: The opinions expressed in this article are for general informational purposes only and should not be considered as specific advice or recommendations for individuals or specific investments (Cointelegraph Research).

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J-S Tremblay
About the author - J-S Tremblay

I've been involved in the cryptocurrency world since 2016 and trading since 2019. I started Moon and Lambo in 2021. I'm passionate about crypto and love to share my knowledge. I hate bankers and I hope that cryptocurrency will change the financial world for the better. View full profile...

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