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Capital inflow on exchanges increases, what are the consequences?


At this time we can analyze in retrospect what the trend was within the main exchanges in the market. Overall, August was characterized by a series of significant turmoil for various cryptocurrencies such as Bitcoin and Ethereum. Capital inflow on exchanges also increased, let’s see the consequences.

While Bitcoin was mostly stable between $ 11,000 and $ 12,000, the smaller altcoins experienced immense volatility. Additionally, the growth of the DeFi industry led many to have a parabolic momentum.

In that sense, we can say that Ethereum played an important role in this, as the demand within its blockchain network had a domino effect that positively affected its price. As such, ETH rose as high as $ 490 before losing its momentum, ending near $ 319.

What has happened in the cryptocurrency market?

In recent weeks, the selling pressure has been felt in general within the cryptocurrency market. The most immediate consequence has fallen on some altcoins that have reported significant losses.

That said, the data surrounding capital inflows to the cryptocurrency and exchange market makes it clear that investors have been bringing money into the market.

For example, top-tier exchanges saw an increase in trading volume of nearly 60% last month. Likewise, lower-tier platforms offering access to smaller, speculative altcoins saw a 30% volume increase.

, Capital inflow on exchanges increases, what are the consequences?, Forex-News, Forex-News
During the month of August, some cryptocurrencies such as Bitcoin experienced a significant correction in their price. But at the same time, capital inflow on exchanges increased by 36% from July. Source: Tecnobits

It is important to note that institutional trading volumes also increased, and CME’s futures contract trading activity increased more than 36%. Specifically, a total of 203,867 Bitcoin contracts were traded in August.

So the main takeaway is that the cryptocurrency market has seen massive inflows of capital from new and veteran traders alike. Consequently, top-tier exchanges now account for 64% of total volume (up from 60% in July).

The uptrend stops, or at least slows down and the inflow of capital in exchanges increases

Over the past few days, the strong uptrend that was previously guiding the entire market to the upside began to stagnate.

Bitcoin, which peaked at $ 12,200, has since slid significantly lower, unable to generate any clear buying pressure. This cryptocurrency started last week at US $ 11,622 and ended at US $ 10,343. It briefly fell below the $ 10k mark on Saturday, but quickly rebounded, encountered resistance at this point, and rose again above $ 10,100.

For their part, altcoins have been hit hard by this decline in Bitcoin, with many falling by as much as 50%. Ethereum has perpetuated this decline as the cryptocurrency slid from highs of $ 490 to lows of $ 320.


All this inflow of capital into the market seems like a positive sign for the cryptocurrency industry. However, it is necessary for Bitcoin to stay above $ 10,000 and provide the added market with room to rally further so that this capital can be the driver of the uptrend recovery.

As of this writing, BTC is priced at US $ 10,156.52 according to CoinDesk. This translates into a decrease of 0.63% compared to yesterday, so we should keep abreast of what happens in the coming days.

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