Low liquidity in bitcoin and ether markets has traders worried that the crypto market could become more susceptible to shocks. Reports godbole17.
worsen and the situation is now more alarming than it was three months ago. That has traders worried about abrupt price swings in the crypto market.
"Funds trying to trade size are forced to TWAP over longer periods hence why it looks like some charts have recently been 'walked up' such as STX," Dibb added. "Realistically though, dwindling market depth has also meant that most large funds have not been participating at the same level as previous due to the amount of slippage associated," Dibb noted, adding that any large institution that offloads coins now is going to have a deeper effect on the market.The latest decline in the market depth comes amid dwindling volatility expectations in the bitcoin market.
"An environment conducive to high volatility is being created," Ardern said."And because the depth is low, it only takes a small amount [buy/sell order] to influence the price, and the resulting hedging activity of market makers to amplify market volatility through hedging."
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