The increase in Open Interest and the reduction in the Market Cap of Stablecoins became a strong sign of capital rotation in the crypto market. However, this trade positions us in the perspective of no new liquidity entering crypto today.

From May to July we saw OI increase by around 54%, in the same period the 60-day MarketCap Change of stables reduced by around 80%. From July to today, OI decreased by 25%, The surge in Open Interest and the decline in the Market Cap of Stablecoins are clear indicators of a significant shift in capital within the crypto market. However, it also signifies that no new liquidity is entering crypto today.

Between May and July, Open Interest surged by about 54%, while the 60-day MarketCap Change of stablecoins plummeted by approximately 80% during the same period. From July to the present, Open Interest has contracted by 25%, while stablecoins have witnessed an impressive increase of 4.7 billion.

This surge in stablecoins signifies a concerted effort by bullish investors to establish a robust support level amid persistent, albeit weakening, selling pressure.

As such, the capital reshuffle among traders offers a clear explanation for the observed transformations in the cryptocurrency market, effectively pushing out less resolute investors. Unlike stablecoins which saw increases of 4.7 billion.

The increase in stables in this scenario shows that bulls are working to establish a robust floor as selling pressure still exists, but is increasingly weakening.

Capital rotation among traders is part of the explanation for the changes observed in the cryptocurrency market, weak hands are being expelled.

Written by Percival