- Bitcoin's huge price rally this year is masking a decline in market liquidity.
- That means smaller bitcoin trades can have a bigger impact on the world's leading cryptocurrency.
- A trade of 462 bitcoins can move the price 1% compared to the more than 1,400 bitcoins in January, according to CCData.
Bitcoin It's up 70% year-to-date, but market liquidity for the world's top cryptocurrency is drying up.
That means smaller trades can move bitcoin prices more and more. For example, a purchase of 462 bitcoins ($13 million) late last month managed to move the price by 1% versus more than 1,400 bitcoins ($23 million) in January, according to CCData, cited by the financial times.
That is the lowest point of market depth for bitcoin trading across the stablecoin belt since May 2022, when the crypto market was reeling from price declines and the failure of key industry players.
Overall liquidity in the market has been declining since the start of the year, CCData research analyst Jacob Joseph told Insider via email.
โIt is worth noting that Binance's decline in market share in April may have also contributed to the decline in liquidity for the BTC-USDT pair above,โ he added.
Binance's problems may be related to A Regulatory Crackdown Against Crypto Exchange Firm. meanwhile last year FTX collapse and sister firm Alameda created a liquidity gap that other crypto firms have been unable to fill, traders told the FT.
And although the price of bitcoin has been on the rise, especially due to the banking turmoil caused renewed confidence in currency, has been stagnant of late.
In recent weeks, bitcoin has languished in the $28,000-$29,000 range. That coincided with outflows of $72 million in digital asset investments over the past two weeks after six straight weeks of inflows, according to CoinShares data cited by the FT.
