1/ Bitcoin's market-wide liquidity has plummeted following the recent collapse of FTX/Alameda.📉
Since Nov 5, Kraken’s BTC depth has fallen by 57%, Bitstamp’s by 32%, Binance’s by 25% & Coinbase’s by 18%.
What does this mean for the general crypto market?🤔
📈 via @KaikoData
2/ Firstly, what is Market Depth?🤔
Market depth refers to a market's ability to absorb rather large market orders without significantly impacting the price.
The greater the market depth, the less likely that large trades will greatly impact an asset's price and vice versa.🔁
3/ Following the collapse of Alameda Research, one of the largest market makers in crypto, market depth alongside liquidity took a significant tumble, with BTC liquidity (within 2% of the mid price) falling from 11.8K BTC to just 7K, its lowest level since early June.
4/ The loss in liquidity and subsequently market depth gives BTC's price less protection against large orders.
Lower Liquidity 💧 = Higher Volatility 📉📈
Therefore the general crypto market may be on the verge of a potentially volatile move, but to which side??🤔
5/ The aftershocks of the FTX/Alameda collapse will surely be felt for many months ahead, as the breadth of the FTX contagion continues to emerge.
Tune in to Market Watch this evening for a market update from Evai's very own @mdtrade
Crypto CryptoCurrencies BTC BitcoinThis post is based on this twitter thread.