Crypto Enters Q3 With Thinner Liquidity, Less Leverage

Institutional data provider Talos reported that long liquidations in Bitcoin and Ether totaled $8.35 billion in the second quarter, leaving markets entering the third quarter with reduced leverage and thinner liquidity. Bitcoin open interest fell 32% from its Q2 peak to $33.5 billion, while Ether open interest dropped about 40% to $16.2 billion.

Talos linked the deleveraging to net outflows from U.S. spot Bitcoin exchange-traded funds, a slowdown in purchases by a large corporate buyer known as Strategy, and a contraction in stablecoin supply that reduced on‑ramps for trading.

Data on ETF flows showed U.S. spot Bitcoin funds recorded $696.3 million in net outflows on June 25. June outflows totaled roughly $4.5 billion, bringing year-to-date ETF redemptions to about $5.5 billion. Disclosures from Strategy show the buyer acquired roughly 3,600 BTC in June, down from about 25,000 BTC in May and more than 50,000 BTC in April. The firm reported a net sale of 32 BTC earlier in June and held 847,363 BTC at month-end, at an average purchase price of $64,103.

Liquidity measures narrowed. Talos calculated Bitcoin’s 2% order-book depth — the value of buy and sell orders close to the market price — fell to roughly $35 million to $40 million by late June, from about $70 million in early May. Spot exchange volume fell 28% quarter-over-quarter to $2.32 trillion.

The report indicated the Q2 liquidations removed a large amount of leveraged exposure. Talos also noted reduced order-book depth lowers the market’s capacity to absorb large orders, increasing the likelihood that large trades move prices more sharply.

At the time of the report, Bitcoin was trading around $58,656.