Crypto Market Liquidity Dwindling, Sparking Concern Among Traders
• The Bitcoin (BTC) and Ethereum (ETH) industries have a combined crypto market dominance of approximately 61 percent.
• Market analysts closely monitor the liquidity of the top two digital assets to understand how well the industry is performing.
• According to aggregate data from Paris-based crypto firm Kaik, Bitcoin’s 2 percent market depth for Tether USDT pairs aggregated from 15 centralized exchanges has slipped to 6,800 BTC, the lowest since May 2022.
Crypto Market Liquidity Dwindling
The Bitcoin (BTC) and Ethereum (ETH) industries have a combined crypto market dominance of approximately 61 percent, making them essential in understanding how well the cryptocurrency industry is performing. To ascertain this, market analysts closely monitor their liquidity levels – defined as an asset’s ability to be purchased or sold without impacting underlying prices significantly.
Drop in Crypto Liquidity
Recently, there has been a significant drop in Bitcoin and Ethereum’s liquidity – attributed mainly to the fall of Alameda Research, a sister crypto firm to the FTX exchange. This drop was confirmed by aggregate data from Paris-based crypto firm Kaik; according to which, Bitcoin’s 2 percent market depth for Tether USDT pairs aggregated from 15 centralized exchanges has slipped to 6,800 BTC – its lowest since May 2022.
Consequences of Thin Liquidity
Due to thin liquidity conditions, large cryptocurrency trades take longer time periods than usual – sometimes days or weeks – leading traders and fund managers alike struggle with slippage associated with such trades. Moreover, Matthew Dibb – Chief Investment Officer at Astronaut Capital – warns that these conditions can lead to more drastic moves in alternative cryptocurrencies due to low liquidity levels in their markets.
Analysts Warn About Low Liquidity
Given these developments in the cryptocurrency sector, analysts warn about further volatility ahead as investors are bound to face difficulties when trading large volumes due to lower available liquidity levels. Thus it becomes all the more important for traders and investors alike keep an eye on market conditions so they take appropriate measures when trading cryptocurrencies.
All things considered it is clear that current conditions within the cryptocurrency sector dictate that caution must be exercised when trading digital assets due to thinning liquidity levels across popular coins such as Bitcoin and Ethereum. By regularly monitoring markets and assessing risk appropriately traders can ensure they make informed decisions while conducting transactions within volatile digital asset markets