August Crypto Insights

In August, the combined on-chain volume of the top two cryptocurrencies saw a significant drop of 6.3%, dwindling to $176 billion. This decline was driven by Bitcoin, which experienced a 6.7% decrease, and Ethereum, which saw a 5.7% reduction in trading volume throughout the month. These findings stem from research conducted by The Block, marking the fifth consecutive month of decreasing on-chain activity since March, resulting in a staggering 56% year-over-year decrease.

1/13 August summary ????

Most metrics corrected further.

Total adjusted on-chain volume decreased by 6.3% to $176B (BTC: -6.7%, ETH -5.7%): pic.twitter.com/qEgaJ1ErPf

— Lars (@lars0x) September 1, 2023

Downturn Despondency

However, amidst this bearish trend, the adjusted on-chain volume of stablecoins managed to increase by 6.8%, reaching $520.9 billion, as reported by the research. Nonetheless, this metric remains around 35% below the figures observed in March. In addition, the supply of issued stablecoins contracted by 2.2% to $115.1 billion in August, with Tether (USDT) and Circle (USDC) slightly expanding their market shares.

The crypto sector also saw a downturn in revenues during the same period. Bitcoin miner revenue dropped by 6.8% to $805 million, while Ethereum staking revenue experienced a 7.5% decline, falling to $130 million in August. On the Ethereum network, the monthly volume of the NFT marketplace also shrank by 8%, reaching $391 million, primarily due to reduced secondary sales activity.

Centralized exchange spot volume followed suit with a 2.8% decline, plummeting to $261.6 billion, marking its lowest point since October 2020. Notably, Binance continued to lead the market with a 73.4% share, despite regulatory pressures, followed by Coinbase at 10.2% and Kraken at 5.3%, as stated by The Block.

In the realm of crypto derivatives trading, a similar trend emerged for the month. Futures Open Interest, which represents outstanding unsettled contracts, decreased by 14% for Bitcoin and 18% for Ethereum contracts. Furthermore, BTC monthly futures volume dropped by 5.4%, down to $603 billion, and ETH futures monthly volume fell by 15.5%, reaching $264 billion.

September typically exhibits a subdued atmosphere in the crypto space, characterized by more declines than gains in previous years. Nonetheless, crypto enthusiast and Ethereum educator Anthony Sassano maintained an optimistic outlook, suggesting that late-stage crypto markets in a crab-like phase can be more challenging for most participants than bear markets. He commented, "It's the 'what if there's never another bull market?' phase of the crypto cycle, and it's where even seasoned investors may lose faith. Ironically, this is usually when the bull market returns."

Crypto Market Prospects

As for the current state of the crypto market, total capitalization remained relatively stagnant at just below $1.1 trillion over the weekend. Bitcoin (BTC) showed a slight uptick of 0.5% for the day, trading at just under $26,000, rebounding from an intraday low of $25,800. Ethereum (ETH) remained steady, hovering at $1,638 at the time of this writing.