Key facts
- Bitcoin and Ether experienced $8.35 billion in long liquidations during Q2.
- Bitcoin open interest decreased by 32% to $33.5 billion, and Ether open interest fell 40% to $16.2 billion.
- Market liquidity thinned, with Bitcoin's 2% order-book depth dropping to $35-40 million.
- Spot exchange volume for cryptocurrencies decreased by 28% in Q2.
- US spot Bitcoin ETFs saw significant outflows in June, totaling around $4.5 billion.
Cryptocurrency markets entered the third quarter with reduced leverage and thinner liquidity following a significant reset in the second quarter, according to data from institutional provider Talos. A wave of liquidations totaling $8.35 billion for Bitcoin (BTC) and Ether (ETH) long positions cleared speculative bets, coinciding with weakened demand from key sources.
Talos reported that Bitcoin open interest fell 32% from its Q2 peak to $33.5 billion, while Ether open interest dropped 40% to $16.2 billion. This deleveraging reduced the amount of leveraged money in the market, potentially making it less vulnerable to cascading forced selling. However, the market's ability to absorb renewed selling pressure has diminished due to reduced order-book depth.
Weakening demand was evident throughout Q2. US spot Bitcoin ETFs experienced net outflows of approximately $4.5 billion in June, including a single-day outflow of $696.3 million on June 25. Furthermore, institutional buyer Strategy significantly reduced its Bitcoin purchases in June, acquiring about 3,600 BTC compared to over 50,000 BTC in April. Spot exchange volume also contracted by 28% quarter-over-quarter to $2.32 trillion.