Volatility continues in the crypto markets

The latest report from the company Crypto comparison shows that volatility has returned to very high levels in the crypto markets.

Volatility continues to rise in crypto markets

Volatility has returned to cryptocurrency markets in August as Bitcoin and Ethereum failed to break key resistance levels of $25,000 and $2,000 before a selloff occurred following Fed Chairman Jerome Powell’s Jackson Hole speech. This is one of the key findings highlighted in Crypto Compare’s new monthly report on cryptocurrency markets.

Bitcoin and Ethereum closed the month at $20,050 and $1,554 respectively, down 14.0% and 7.47%. This volatility was reflected in trading volume as spot trading on the centralized exchanges jumped 36.8% to $1.91 trillion.

Thus, the trend remains basically negative wait-and-see in digital asset markets, which is suffering from the difficult economic situationgenerated by high inflation and literally skyrocketing energy costs since the outbreak of the conflict in Ukraine.

Against this backdrop, the Fed’s policy, which appears to have become aggressive to bring inflation under control, with two consecutive 0.75% rate hikes and a third on the way, is only depressing the stock markets and with them the cryptocurrency markets.

Crypto Compare’s report reads:

“Spot trading volumes increased by 36.8% in August to $1.91tn – marking August as the second largest month by spot volume so far this year. However, this increase in spot trading volume led to a 9.59% decline in derivatives market share – with the derivatives market falling to an annual low of 62.4% market share.

Analysis of collected data

According to data collected by CryptoCompare, derivatives trading volume is bucking the trend, rose 11.9% to $3.16 trillion. This is the first increase in three months that brings derivatives to be the driver of the market, after the big fall in previous months.

CryptoCompare experts write:

“Historically, the derivatives market has dominated crypto trading volumes. The drop in derivatives market share reflects the uncertain macroeconomic conditions with rising inflation rates and a looming threat of recession. The price action after the Fed reiterated its stance to control inflation suggests there was a strong sell-off from investors’ spot holdings.”

During the period, Bitcoin trading in Tether increased 15.4% to 10.1 million BTC in August, realizing the highest volume recorded for the BTC/USDT trading pair since June 2020. USDT’s market share in BTC spot trading in stablecoin or fiat increased to 66.4%, the highest level since September 2020.

Trading in BUSD increased by 0.44% to 2.14 million BTC in August, and the token saw volumes rise 394% since the beginning of the year. Meanwhile, USDC and TUSD saw their trading volumes fall by 11.4% and 63.0% respectively in August.

The combined volume of BTC and ETH futures contracts on the CME fell 20.7% to $28.9 billion in August. This is the lowest volume recorded for the exchange since December 2020.

Finally, there is an interesting figure regarding the highest trading volume of the month, recorded on August 15: 119 billion dollarsup 67.8% from the infra month’s high in July.