Welcome to Bitstamp’s August Monthly Briefing! This month, we’re taking a closer look at key developments in the crypto market, from Bitcoin’s growing dominance to the rapid rise in OTC trading. We’ll also highlight the top risers and fallers of the month and give you a heads-up on the major events shaping September.Ready to jump in? Let’s go!Market updateThe total crypto market cap dropped by 11.0% month-over-month, hitting $2.03 trillion at the end of August. However, trading volume on the leading crypto spot exchanges we monitor increased by 4% during this period.Bitcoin’s market dominance grew by 1.4 percentage points month-over-month, reaching 57.4%.Total crypto market cap (grey) and BTC dominance (green)Source: Total crypto market cap, Bitcoin dominancePast performance is not a reliable indicator of future results. The performance of crypto assets can be highly volatile. Data taken on September 1, 2024. Best performing CMC 100 assets in August+45.6% Helium (HNT) – The asset's surge was driven by increased buyer activity, bullish technical signals, and the expansion of decentralized physical infrastructure networks.+22.5% Tron (TRX) – Tron’s support for meme coins, highlighted by the launch of SunPump, fueled a surge in TRX price.+20.6% Aave (AAVE) – The deployment of Aave V3, using ZKsync technology for better scalability, pushed the protocol's token price up.Worst performing CMC 100 assets in August-37.2% Maker (MKR) – The price dropped following broader market weakness and DeFi concerns over MakerDAO's rebranding as Sky, raising questions about its decentralization.-35.8% Brett (Based) (BRETT) – Brett’s price declined amid bearish market conditions and a broader downturn in the crypto sector.-34.5% Notcoin (NOT) – The price decline followed broader market weakness and extended Notcoin’s negative trend from July.Past performance is not a reliable indicator of future results. The performance of crypto assets can be highly volatile. Data taken on September 1, 2024. Key macro & crypto events in September 2024September 5-8: ETH Warsaw in Warsaw, PolandSeptember 6: US Unemployment RateSeptember 11: US Inflation & Core Inflation rateSeptember 11-12: Dubai AI & Web3 Festival in Dubai, UAESeptember 11-14: Boston Blockchain Week in Quincy, MA, USASeptember 12: Governing Council of the ECB in Frankfurt, GermanySeptember 12-13: Global Blockchain Congress Singapore in SingaporeSeptember 16-22: Ethereum Singapore in SingaporeSeptember 18: FED Interest Rate Decision & FOMC Economic ProjectionsSeptember 18-19: TOKEN2049 Singapore in Marina Bay Sands, SingaporeSeptember 25-26: European Blockchain Convention Barcelona in Barcelona, SpainSeptember 26: US GDP Growth Rate QoQ FinalSeptember 27-29: Proof-of-Work Summit in Frankfurt, GermanySeptember 27-30: The Mining Conference in Baxter, MN, USAIntroduction to crypto OTCCrypto Over-the-Counter (OTC) trading refers to the process of buying and selling cryptocurrencies directly between two parties, outside of traditional exchanges. Unlike exchange trading, where buy and sell orders are publicly matched on a platform, OTC deals are typically done privately and often involve large amounts of cryptocurrency. This method is favored by institutional investors, high-net-worth individuals, and other market participants who want to execute large trades without causing significant price movements on public exchanges.The concept of OTC trading has existed in traditional finance for decades, but it entered the crypto world in the early 2010s, shortly after Bitcoin and other cryptocurrencies became popular. Initially a niche market, OTC trading grew significantly as institutional investors entered the crypto space, especially around the 2017 cryptocurrency boom. This marked the beginning of significant traction for crypto OTC, which has since become a key part of the cryptocurrency ecosystem. By enabling large trades to be conducted discreetly, OTC trading has helped stabilize the market and attract more institutional capital.As of 2024, the crypto OTC market has grown substantially, with billions of dollars traded daily. Major financial institutions, specialized crypto firms, and exchanges now operate OTC desks, serving a growing base of institutional and high-net-worth clients. The market's growth is also reflected in the increasing amount of Bitcoin and other cryptocurrencies held by these desks, highlighting the rising demand for OTC services.By late August 2024, crypto OTC desks held over 368,000 Bitcoin (worth over $22 billion), according to CryptoQuant. This marked a 70% increase in just three months, reaching the highest level since June 2022. The increase in Bitcoin holdings at OTC desks suggests more institutional investors are entering the market and opting for OTC channels to manage their trades efficiently. The rise of OTC trading has also provided greater stability to the market. By allowing large trades to be conducted off-exchange, OTC desks help prevent the extreme volatility that can result from massive buy or sell orders on public platforms. This development is particularly important as the cryptocurrency market continues to mature and attract more traditional financial institutions.As institutional adoption increases, the role of OTC trading in facilitating large transactions is likely to become even more critical. This trend underscores the need for robust, reliable OTC services, which Bitstamp began providing as early as 2022. Bitstamp’s OTC RFQ service* offers instant access to deep global liquidity, an institutional-grade matching engine, non-stop availability with unrivaled uptime, and premium live support.Recommended readsThe Best is Yet to Come by The Wolf DenBitcoin's performance in 2024 has been volatile, with significant price fluctuations following a strong start to the year. After initial gains, Bitcoin experienced a series of drops, particularly in historically weak months like June and August. September, often a challenging month, may continue this trend. However, historically, Q4 tends to be strong for Bitcoin, with the potential for significant gains in October and November. Looking ahead, if Bitcoin can weather the current downturn, it could reach new highs, especially if favorable conditions align, including positive election outcomes and continued institutional interest.Bitcoin Miners' AI Arbitrage Play to Boost Revenue by VanEckPublicly traded Bitcoin miners are increasingly integrating AI and high-performance computing (HPC) into their operations, positioning themselves as key players in both the energy and digital infrastructure markets. This shift offers significant revenue potential, as AI companies need energy, which miners can provide efficiently. Despite the substantial capital required for AI/HPC conversions, miners could see their market value double by 2028. Early adopters like Core Scientific are already benefiting, and the trend suggests that miners who successfully pivot to AI/HPC could become major players in both industries, offering investors substantial long-term gains.Exploring Bitcoin for Data Availability by Galaxy ResearchThis research piece explores Bitcoin as a data availability layer. Bitcoin's blockspace is extremely scarce, capped at 4MB per block, posing significant challenges for Rollups seeking to use Bitcoin as a data availability layer. Rollups, particularly those using ZK-based methods, require substantial blockspace to post proof outputs and state differences, consuming up to 10% of a block per transaction. With Bitcoin blocks consistently full and competition for blockspace intensifying, Rollups may face unsustainable transaction fees, potentially rendering their use of Bitcoin economically unviable. As a result, Rollups might need to explore alternative data availability solutions or restructure to remain aligned with Bitcoin's network.Our Vanishing Internet: An Interview with Dr. Larry Sanger by Mike SolanaIn this interview, Dr. Larry Sanger, co-founder of Wikipedia, discusses the alarming impermanence and malleability of the internet, which is erasing crucial records and reshaping information. Sanger reflects on how Wikipedia, originally envisioned as a neutral and decentralized platform, has succumbed to establishment bias. He warns that AI, while potentially more useful than Wikipedia, could worsen these issues by subtly influencing beliefs. To combat this, Sanger advocates for decentralized systems to preserve knowledge, emphasizing the importance of questioning mainstream narratives and seeking diverse perspectives.* OTC RFQ is not available in the US.No information in this blog is intended to provide any personal investment services or advice nor is it an investment recommendation. Clients are responsible for making their own investment decisions. Bitstamp accepts no responsibility for any damage and/or loss arising from the use of information provided herein. Past performance is not necessarily an indicator of future results. Please consider your individual position and financial goals before making an independent investment decision. Bitstamp is licensed to engage in virtual currency business activity by the New York State Department of Financial Services. Licensed as a Money Transmitter by the New York State Department of Financial Services.Not offered in the following states: Hawaii and NevadaBitstamp UK Limited is registered with the UK's Financial Conduct Authority. Please read the Risk Warning Statement before investing. Cryptoassets and cryptoasset services are not regulated by the Financial Conduct Authority. You are unlikely to be protected if something goes wrong. Your investment may go down as well as up. You may be liable to pay Capital Gains Tax on any profits you earn.
