Crypto markets may seem calm post-October, but a closer look reveals a significant issue: insufficient liquidity. This makes it challenging to trade large amounts without causing substantial price fluctuations. The ability to trade easily on major exchanges is now lower, making market makers more cautious. This situation sets the stage for thinner markets, where small trades can lead to sharp price swings. The October liquidation event wiped out billions in open trades and caused a lasting impact, with a significant portion of available capital for trading vanishing from centralized exchanges. This makes the market more vulnerable to sudden, dramatic moves. The impact is most noticeable in Bitcoin and Ethereum, where the capital needed to move their prices by one percent has decreased significantly. Experts suggest this is a structural change, not a temporary blip, affecting both regular traders and firms relying on specific trading strategies. Crypto markets are now more fragile, with large trades or routine economic news potentially triggering exaggerated price reactions. While this could lead to bigger rallies if investor confidence returns, it also makes the market more susceptible to sudden drops and liquidation cascades.

The Daily News Now! — Every city. Every story. AI-powered.

---

Hosted on Acast. See acast.com/privacy for more information.