Talos: Crypto market could see higher volatility in Q3

The cryptocurrency market faces the potential for increased volatility in the third quarter due to declining liquidity, even after significant leverage was flushed out in the second quarter, according to digital asset trading platform Talos. In an analysis reported by Cointelegraph, Talos noted that long positions in BTC and ETH worth a total of $8.35 billion were liquidated in the second quarter. Open interest for BTC fell by 32% from its second-quarter peak to $33.5 billion, while ETH open interest dropped by 40% to $16.2 billion. However, Talos pointed out that market liquidity has also weakened, citing outflows from U.S. spot BTC ETFs, a slowdown in purchases by MicroStrategy, and a reduced supply of stablecoins. The platform concluded that while the risk of forced liquidations has diminished, the thinner liquidity could lead to wider price swings in the event of a large-scale sell-off.