SOL, OKB surge as Bitcoin ETF excitement cools wider crypto market
August saw return of the alts but BTC may not escape September’s shadow
A look at the crypto market's developments and performance in August 2021 — Market Watch Monthly
- August saw several alts surging more than 100% as alt season came quickly.
- BTC and stocks outperformed other assets in the absence of any negative monetary policy changes.
- DeFi activity saw a sharp rise, with volumes in August surpassing nearly all other months this year.
Ending with a gain of 14.07%, August was BTC's second consecutive month in the green. The market leader fell as low as 37,307 USDT and peaked at around 50,500 USDT before settling at nearly 47,400 USDT by the month's end, as per the OKEx BTC/USDT price.
Following the recovery in July, the market as a whole had a good showing in August, with altcoins rallying — some much more than others. ETH, for instance, gained a relatively modest 37.78% in the month, while coins like LUNA and SOL posted gains of 203.06% and 240.18%, respectively.
Even BTC, between its lowest and highest points of the month, made a 35.66% move.
Bitcoin futures also reflected a return to optimism at the start of August as retail traders warmed up to the possibility of BTC rallying much higher after breaching 40,000 USDT levels. However, as we noted in later stages, retail traders did not take a permanently bullish stance on the market leader despite positive price action.
BTC and stocks drove the market higher
July marked BTC's return to dominance after lagging behind traditional assets for three consecutive months. August extended that trend amid a strong performance from stocks with no major tapering measures by the U.S. Federal Reserve in sight.
Notably, gold and oil were poor performers in August, down 0.05% and 6.96%, respectively. Meanwhile, the Nasdaq and S&P 500 were the top performers at 4.0% and 2.90%, respectively. The U.S. dollar barely managed to stay green in August, as no clear monetary policy choices were evident.
August’s trading sentiment on OKEx
With the general recovery across the market, OKEx trading data also showed an uptick in month-over-month volumes for all markets — spot, swaps and futures.
As shown in the chart above, spot trading accounted for 24% of all volume in August, up from July's 19%. While futures also saw a volume increase, their percentage of total trading volume dropped by 6% compared to last month. Swaps, on the other hand, grew 1% in terms of their share of the total volume.
Selected alts made major gains
While July marked the return of BTC and ETH, in terms of performance, August saw alts generally overtake the market leaders, with some beating them by exceedingly large margins.
In line with this trend, we saw the Altcoin Season Index surge sharply in August, going from mid-month lows of around 6 to as high as 50 near the end. This quick rise corresponds with the stellar performances put up by select alts in the month.
DeFi TVL and volumes show potential sentiment recovery
Decentralized exchanges and decentralized finance protocols remained relatively stable during the recent market downtrend and did not succumb to negative sentiment. Once again, we believe this has to do with their utility as very real alternatives to several traditional financial services.
August started with the gross value locked in DeFi at around $91 billion and ended with the figure at over $117 billion. Similarly, the net value locked started with roughly $69 billion and ended with over $87.5 billion.
As per data from Dune Analytics, decentralized exchanges showed mounting volumes in August after July's dip, and Uniswap was in the lead once again. Notably, however, August volumes didn't just exceed those of July but also surpassed volumes seen in every month this year except for May. This could be a sign of a general recovery in the DeFi niche and could result in asset prices increasing in the coming weeks/months.
In terms of price performance, DeFi assets lagged behind some of the other assets in August, with only FTM putting up notable gains at just over 200%. Some of the typical performers, including SNX, AAVE and COMP, could muster increases of only 13.58%, 18.64% and 9.52%, respectively.
Despite the positive performance in August, September — a month that has historically been poor for BTC and the crypto market — has seen prices crash on more than one occasion.
Currently, the market is reeling from a variety of negative news developments, ranging from expectations of hawkish changes to monetary policy to fallout from a debt crisis faced by China's Evergrande Group.
At the time of writing, BTC has been actively testing the support zone between 40,000 and 42,000 USDT and is not out of danger as of yet. A bounce from here could see consolidation for the market leader until market sentiment turns neutral or bullish.
On the flipside, BTC could get hit by upcoming monetary policy announcements that will also affect stocks and possibly interest rates. 40,000 USDT remains a key support level and a fall below that could see us revisiting prior lows under 35,000 USDT.
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