Hi HODLers and Hiveans,
Following the worldwide bank issues and the bankruptcy of SVB, Silvergate and Signature bank; the liquidity has dried up in the crypto markets.
We did not have much to complain about at first as Bitcoin jumped as high as $28,900 showing a newly revived narrative of BTC being an alternative to banks. The thinner liquidity certainly helped during this move.
As some traders say:
"A drop in liquidity certainly helps traders to the upside, but there is always eventually a downside,”
All good, for now... This could reverse anytime and the downside volatility could be as strong if not stronger. So: "fasten your seatbelt!" and be ready for it!
“The moment buy pressure subsides, anything can happen to price."
Update on the BTC liquidity
What is the 1% Market Depth?
The 1% market depth is calculated by summing the bids and asks within 1% of the mid-price for the top 10 cryptocurrencies.
If the market depth is sufficient and order books are crowded around the market price, it reduces the volatility in the market.
The current most liquid pair is BTC-USDT.
This pair also suffered a liquidity blow after Binance ended its zero-free program.
Interesting charts and I will definitely take this into account with my ongoing trading. Movements might be amplified by this lower liquidity.
Stay safe out there,
Sources:
- Bitcoin Liquidity Hits 10-Month Low Amid US Banking Crisis
- Bitcoin Was a Winner During the U.S. Banking Crisis, but Illiquidity Prevents It From Being a USD Hedge
Below are my last articles if you want to take a look!