Bitcoin Consolidates as Liquidity Flows Shift to Ethereum and Broader Altcoin Markets

Cryptocurrency

Summary:

The report noted that the shift represents a measured rotation of institutional liquidity following Bitcoin’s all-time high formation.

Bitcoin (BTC) consolidates near current levels as capital inflows extend along the risk curve toward Ethereum and broader altcoins, according to Bitfinex Alpha’s Aug. 25 report.

The report noted that the shift represents a measured rotation of institutional liquidity following Bitcoin’s all-time high formation.

Bitcoin declined 4.5% from the weekly open on Aug. 18 until Aug. 22, sliding to local range lows as investors de-risked ahead of the Federal Reserve’s Jackson Hole symposium.

The asset reached $111,990 amid renewed weakness in US spot exchange-traded funds (ETFs) flows, with Bitcoin ETFs recording $1.18 billion in net outflows over the week. As of press time, BTC lost the $110,000 threshold and is priced at $109,795.71.

Federal Reserve Chairman Jerome Powell’s dovish remarks at Jackson Hole triggered a sharp rebound in risk assets, sparking a broad-based short squeeze across crypto.

Ethereum led the recovery, surging to a new all-time high of $4,958.70 on Aug. 24 and demonstrating its role as a liquidity driver for institutional markets.

Spot ETH ETFs registered $197 million in outflows on Aug. 18 alone, marking the third-largest daily exit on record. However, Ethereum treasury companies absorbed substantial selling pressure, with preliminary estimates suggesting meaningful institutional support.

Corporate treasuries, including SharpLink Gaming, Bitmine Immersion Technologies, and BTCS, accelerated accumulation, with on-chain treasury balances exceeding $10 billion. The report noted that the rotation reflects softer capital inflows into Bitcoin following its Aug. 14 all-time high of $123,640.

Bitcoin’s realized cap expanded at 6% per month during the current move, compared to 13% monthly growth during late-2024 breakouts above $100,000, indicating more cautious investor appetite.

Macro signals remain supportive

Global liquidity conditions remain supportive, with the combined M2 money supply from major central banks approaching $100 trillion. The structural upward trend in global liquidity reinforces the long-term bullish case for digital assets, though capital allocation has become more selective.

Solana climbed above $200 to reach $212.60 as the broader digital asset class pushed higher alongside equities, reflecting tightening correlations between crypto and traditional risk assets. Meanwhile, network development continues to advance, showcased by DBS Bank’s recent tokenized note issuance on Ethereum.

In this backdrop, Bitfinex expects Bitcoin to remain range-bound while Ethereum attracts heightened institutional demand, mirroring Bitcoin’s dynamic from early 2024.

The report anticipated more significant capital rotation into higher-risk altcoins later in the cycle, with broader market re-rating dependent on renewed Bitcoin ETF inflows and new altcoin investment vehicles.

Source: Cryptoslate

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Manuel

Political

Economic

The Trump administration is working to halt development of an offshore wind project planned near Maryland, in the latest escalation of the president’s war on the clean energy source he loathes.

The Interior Department plans to move to remand and vacate a permit granted to the $6 billion Maryland Offshore Wind Project, according to a court filing dated Friday. The project — which is being developed by US Wind and will consist of as many as 114 wind turbines about 10 nautical miles off the coast of Ocean City, Maryland — was approved by the Biden administration in 2024 and was set to begin construction next year.

President Donald Trump has aggressively and specifically targeted wind power in his larger crusade against clean energy, often characterizing it as a bird-killing eyesore. On his first day in office, Trump indefinitely halted the sale of new offshore leases and his administration has since paused permitting of all developments on federal lands and waters.

His latest salvo underscores the risks faced by US developers of offshore wind projects who can only build in federal waters controlled by Trump. The Interior Department on Friday halted work on an 80% complete offshore wind farm being constructed off the coast of Rhode Island by Denmark’s Orsted A/S, sending shares of the company to record lows. In April, Secretary of the Interior Doug Burgum halted work on Equinor ASA’s $5 billion Empire Wind farm off the coast of New York, but reversed the decision a month later after the administration reached a deal with New York Governor Kathy Hochul to open the way for new gas pipelines to be built in the state.

US Wind, which is owned by funds managed by Apollo Global Management and a subsidiary of Toto Holding SpA, was the tenth offshore wind project to recieve approval from the Biden administration, which at the time said the project was part of a plan to build offshore wind capacity equivalent to roughly 30 nuclear reactors.

“We remain confident that the federal permits we secured after a multi-year and rigorous public review process are legally sound,” Nancy Sopko, US Wind’s vice president of external affairs said in a statement.

Environmental groups said the unprecedented moves would have a devastating effect on US workers, electricity consumers and investment in America.

“The Trump administration’s attacks on affordable energy just keep coming,” said Pasha Feinberg, an offshore wind specialist with the Natural Resources Defense Council. “Americans were promised cheaper electricity, but nearly every day this administration is trying to drive those costs up.”

Source: Bloomberg

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Stocks

Economic

Wall Street stocks ended lower on Monday as investors parsed the outlook for U.S. interest rates and looked ahead to AI chipmaker Nvidia's quarterly earnings this week while digesting a rally on Friday that lifted the Dow Jones Industrial Average to a record high close.

On Friday, stocks jumped after U.S. Federal Reserve Chair Jerome Powell hinted at the Jackson Hole Symposium that an interest-rate cut could be considered at the central bank's September meeting, citing recent labor market weakness."The market has a Jackson Hole hangover," said Jake Dollarhide, CEO of Longbow Asset Management in Tulsa, Oklahoma. "Investors are taking a little bit of a breather."

The Personal Consumption Expenditures Price Index - the Fed's preferred inflation gauge - is due to be released on Friday, while official nonfarm payrolls data is expected next week. The reports will be crucial, especially after Powell said a rate cut was not certain.

"The focus right now is the labor market," said Brian Klimke, investment director at Cetera Investment Management.

"We have the job market that's rolling over a little bit and the economy is weakening, so the Fed needs to act sooner than later and they're seeing it too."Nvidia (NVDA.O) climbed 1% ahead of its quarterly report on Wednesday, which will be one of Wall Street's most closely watched events of the week and a crucial test of the scorching AI trade.

With Nvidia making up about 8% of the S&P 500, results of the world's most valuable company affect vast numbers of Americans who use index investment funds to save for retirement.

"This is an incredibly important event from a market participant standpoint," said Michael Green, portfolio manager at Simplify Asset Management.Powell's comments on Friday nudged major brokerages to revise their expectations, with Barclays, BNP Paribas and Deutsche Bank currently seeing a 25-basis-point reduction in borrowing costs next month.Traders now see an 84% chance of a Fed rate cut in September, according to CME Group's FedWatch tool. Remarks from policymakers John Williams and Lorie Logan later in the day will be scrutinized to see if they share Powell's policy outlook.

The S&P 500 declined 0.43% to end the session at 6,439.32 points.

The Nasdaq declined 0.22% to 21,449.29 points, while the Dow Jones Industrial Average declined 0.77% to 45,282.47 points.

Nine of the 11 S&P 500 sector indexes dropped, led lower by consumer staples (.SPLRCS), down 1.62%, followed by a 1.44% loss in health care (.SPXHC). Friday's optimism helped the blue-chip Dow close at a record high for the first time since December 2024, and the benchmark S&P 500 logged its strongest one-day gain since May.

On Monday, Jefferies became the latest brokerage to raise its year-end target for the S&P 500.

Beverage company Keurig Dr Pepper (KDP.O) tumbled 11.5% after saying it would buy JDE Peet's (JDEP.AS) for $18.4 billion in cash.

Furniture retailers RH (RH.N) and Wayfair (W.N) each declined more than 5% after U.S. President Donald Trump said on Friday his administration would investigate furniture import tariffs.

Intel (INTC.O) fell 1% after Trump said the U.S. government was taking a stake in the chipmaker. He also said he would make other deals similar to the one with Intel.

Volume on U.S. exchanges was relatively light, with 14.2 billion shares traded, compared to an average of 17.1 billion shares over the previous 20 sessions.

Declining stocks outnumbered rising ones within the S&P 500 (.AD.SPX) by a 4.0-to-one ratio.

The S&P 500 posted 17 new highs and no new lows; the Nasdaq recorded 125 new highs and 39 new lows.

Source: Reuters

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Manuel

Cryptocurrency

Hyperliquid registered more trading volume than Robinhood for the third consecutive month, with July marking the largest gap between platforms at 39.1%.

DefiLlama data shows the decentralized derivatives exchange traded $330.8 billion in combined spot and perpetual volume during July, while Robinhood processed $237.8 billion across all products.

Robinhood’s July volume was made up of $209.1 billion from equities, $195.8 million from options, and $28.7 billion from crypto, based on its Aug. 13 attestation.

Hyperliquid’s $93 billion advantage represents its strongest monthly performance against the retail trading platform since beginning its winning streak.

Data shared by Jon Ma from Artemis shows Hyperliquid traded $256 billion in May compared to Robinhood’s $192 billion, followed by June volumes of $231 billion versus $193 billion, respectively.

Further, Hyperliquid approaches $2 trillion in year-to-date cumulative volume from spot and perpetuals as of Aug. 25.

The protocol has been rising since June, when it registered $226.4 billion, then jumped to the $330.8 billion seen in July. As of Aug. 25, Hyperliquid has already surpassed $349 billion in monthly trading volume with spot and perpetual combined.

Maximum efficiency

The consistent outperformance positions Hyperliquid among dominant forces in crypto derivatives trading despite minimal staffing requirements.

CEO Jeff Yan confirmed that the exchange operates with just 11 core contributors, generating annualized revenue of $1.167 billion based on DefiLlama estimates as of Aug. 20.

The platform achieved $106 million in revenue per employee on Aug. 20, surpassing technology giants and previous record holder Tether Limited at $93 million per employee.

Data gathered by Hyperliquid France places OnlyFans third at $37.6 million, while established tech companies trail considerably with Nvidia at $3.6 million, Apple at $2.4 million, and Meta at $2.2 million per employee.

The trading volume dominance occurs amid institutional adoption of crypto derivatives products, with Hyperliquid capturing market share from centralized exchanges and traditional trading platforms.

Hyperliquid’s consistent volume leadership over Robinhood demonstrates the competitiveness of decentralized finance protocols against established financial technology companies.

This difference is particularly true in crypto-native trading products, where traditional platforms face regulatory and operational constraints limiting their market reach.

Source: Cryptoslate

Risk Warnings and Disclaimers

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Manuel

Cryptocurrency

Ethereum co-founder Vitalik Buterin weighed in on the growing debate over prediction markets, warning that the absence of interest-bearing mechanisms makes them unappealing for risk-averse traders.

In a post on Farcaster, Buterin said the lack of yield forces participants to sacrifice guaranteed returns elsewhere, such as the 4% annual yield available on dollars, just to take part.

He suggested that once markets solve the interest gap, “lots of hedging use cases” could emerge, driving greater volumes and adoption.

Critics see structural flaws

Buterin’s comments came as online discussion flared over the risks and potential of platforms like Polymarket and Kalshi.

The exchange was sparked by an essay from former quant trader Agustin Lebron, who argued that prediction markets are structurally flawed and could destabilize society by encouraging reflexive feedback loops between bets and real-world outcomes.

Lebron contended that prediction markets lack the diverse mix of hedgers, speculators, and institutional investors that underpin traditional financial markets.

He argued that without hedgers transferring risk, prediction markets devolve into contests between sharp traders and retail gamblers, leaving little room for sustainable liquidity.

Supporters push back

His critique drew a detailed rebuttal from pseudonymous trader @TomJrSr, who disclosed financial interests in the sector.

In a lengthy response, he argued that Lebron’s view underestimates the long-term potential for prediction markets to provide valuable hedging tools for businesses, industries, and individuals exposed to real-world risks.

He wrote: “Airlines face hurricanes, utilities face unpredictable temperatures, and energy firms face shifting OPEC quotas.”

He further suggested that prediction markets could offer a cheaper and more direct way to hedge against such events than existing financial instruments.

With Buterin highlighting missing yield and both sides of the debate staking out starkly different positions, prediction markets appear caught between two futures: one as a niche form of speculative entertainment, the other as a legitimate tool for risk transfer and price discovery.

Source: Cryptoslate

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Commodity

Russia-Ukraine Conflict

Oil advanced, solidifying gains from the previous week, as a move above key technical levels helped extend a rally sparked by signs that the Federal Reserve will resume cutting interest rates.

West Texas Intermediate climbed 1.8% to approach $65 a barrel and reach the highest settlement price in three weeks, while Brent closed near $69 a barrel. Fed Chair Jerome Powell on Friday signaled in a speech that the central bank could cut interest rates as soon as its September policy meeting. The comments boosted crude futures on expectations that a rate cut would boost the US economy and raise oil demand.

WTI’s jump above its 100-day moving average of about $64.45 also spurred some buying from algorithmic-based traders.

Elsewhere, Ukraine struck Russia’s Baltic port of Ust-Luga overnight, the latest in a series of attacks on energy infrastructure. Ukraine has attacked eight Russian refineries so far this month, raising concerns of exacerbated fuel market tightness.

Longer-term sentiment remains subdued. Money managers cut their bullish position on crude to the lowest in about 17 years as two of the world’s main oil forecasting agencies said inventories are poised for a glut next year. Crude has been trading in a narrow range since early August as traders reconcile a bearish long-term outlook with several potentially bullish near-term geopolitical factors.

On the one hand, the US has threatened to double a tariff on all imports from India to 50% in retaliation for its purchases of Russian oil. Though the penalty is set to take effect on Wednesday, Indian diplomats have said local processors will continue taking crude from Moscow.

On the other hand, OPEC+’s decision to resume a large portion of idled production has raised concerns about a potential oversupply, with futures now down about 10% lower this year.

Brent futures are now trading at a rare discount to their regional counterpart in Dubai — a shift that could heighten concerns about a growing surplus. The move, months in the making, underscores signs that supply-demand balances in the Atlantic Basin — where contracts are largely priced — are weakening relative to the Middle East, despite OPEC+ adding millions of barrels in daily output.

Trading volumes in Brent futures were lower than the daily average on Monday, with some traders off for a UK public holiday.

Source: Bloomberg

Risk Warnings and Disclaimers

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Economic

Central Bank

Dallas Federal Reserve President Lorie Logan on Monday said she feels the U.S. central bank has more room to reduce its reserves, and she expects banks to turn to its standing repo facility next month to alleviate any liquidity pressures.

"We could see some temporary pressure around the tax date and quarter-end in September," Logan said in remarks prepared for delivery to the Bank of Mexico's centennial conference in Mexico City. "I was encouraged to see market participants using the SRF over the June quarter-end, and I anticipate they will similarly use our ceiling tools if necessary in September."

The facility, aimed at preventing liquidity shortages, allows Treasuries owned by eligible firms to be converted quickly into cash, and should lessen the need for the Fed to step in on an emergency basis. It generally sits unused, though there has been some use when banking reserves drop, notably at the end of September in 2004.

As reserves in the banking system drop, Logan said, it is preferable for the Fed and other central banks to avoid balance sheet expansion in response to higher short-term demand for reserves from banks, or risk an "ever-expanding" balance sheet.

The Fed also offers banks liquidity through its discount-window loans. Logan on Monday said the central bank should consider increasing or removing limits on the size of the facility, or centrally clearing those transactions, and she repeated an earlier proposal for the Fed to offer a daily auction on discount window loans to allow easier distribution of liquidity within the banking system.

Logan did not address the outlook for monetary policy or the economy, an omission that may draw notice from investors who have been watching to see how the Fed's more hawkish policymakers, Logan among them, view the risks around inflation, which remains above the central bank's 2% goal, and the labor market, which has shown recent signs of weakness including a sharp drop-off in monthly payroll gains.

Fed Chair Jerome Powell said on Friday he felt downside risks to the labor market had risen, a development that "may warrant adjusting" the central bank's currently restrictive monetary policy stance. Financial markets took the remarks as a go signal for an interest rate cut at the Fed's September 16-17 meeting, as did many on Wall Street.