Total
liquidity for pioneer cryptocurrency Bitcoin (BTC) fell dramatically by 53.4%
from a peak last seen before the collapse of Bahamas-based digital asset
exchange FTX on October 25th last year. Compared to the start of 2023,
liquidity for the native currency of the Bitcoin blockchain slumped
40.8%.
These are
according to data
from digital assets data provider, CCData, previously known as CryptoCompare.
The firm, which is also a benchmark administrator authorized by the UK
Financial Conduct Authority, said its figures are based on an analysis of 14
cryptocurrency exchanges.
According
to CCData, the recent ramp up in regulatory scrutiny against cryptocurrency
exchanges, particularly in the United States, has significantly impacted
liquidity across various markets, including the cryptocurrency market. This
impact was worsened by the exit of market maker from the jurisdiction, it added.
Earlier
this month, the US Securities and Exchange Commission sued Binance, the world’s
largest
cryptocurrency exchange by trading volume, accusing the firm and its CEO Changpeng
Zhao of operating an illegal trading platform, offering unregistered securities
and misusing client funds, among other allegations. The securities watchdog
followed this up by hitting Coinbase, the biggest crypto exchange in
the Unted States, alleging that it was offering unregistered securities on an
unauthorized trading platform.
In recent
months, the regulator also filed
a complaint against cryptocurrency exchange Bittrex for allegedly operating without
registration and forced Kraken to shut
down its
staking-as-a-service programme. Additionally, it charged crypto exchange Gemini
and crypto lender Genesis for allegedly offering
unregistered securities.
Largest BTC
Liquidations since FTX Collapse
According
to CCData, the recent regulatory pressure and other ‘macroeconomic pressures’ are
possibly responsible for shrinking liquidity in US crypto market. The firm noted
that 1% market
depth, or the ability of a crypto exchange to absorb a trade that is equal to
1% of its total trading volume, has declined significantly among US digital
asset exchanges since November. The depth for bitcoins shrank from
1500 BTC to 400 BTC, it added.
“The impact
differs among exchanges: OkCoin, Bittrex, Cexio, and BinanceUS have faced
significant liquidity declines of 97.6%, 99.2%, 70.6%, and 78.4% YTD,
respectively, with Bittrex and Binance.US encountering SEC actions,” the CCData explained.
Furthermore, SEC’s
charges against Binance announced on June 5 “set off a major wave of BTC-long
liquidations at a scale which hasn’t been seen since the collapse of FTX,” the digital asset data provider noted. Within an hour of the
announcement, aggregate open interest, or the total number of outstanding BTC futures or
options contracts that have not been settled, dropped by 4.51%.
“The
announcement caught bullish traders by surprise, particularly
affecting altcoins, such as Cardano and Solana, which were specifically
mentioned in the lawsuit and are now considered securities by the SEC,” CCData
elaborated. “These tokens experienced the most substantial declines.”
Total
liquidity for pioneer cryptocurrency Bitcoin (BTC) fell dramatically by 53.4%
from a peak last seen before the collapse of Bahamas-based digital asset
exchange FTX on October 25th last year. Compared to the start of 2023,
liquidity for the native currency of the Bitcoin blockchain slumped
40.8%.
These are
according to data
from digital assets data provider, CCData, previously known as CryptoCompare.
The firm, which is also a benchmark administrator authorized by the UK
Financial Conduct Authority, said its figures are based on an analysis of 14
cryptocurrency exchanges.
According
to CCData, the recent ramp up in regulatory scrutiny against cryptocurrency
exchanges, particularly in the United States, has significantly impacted
liquidity across various markets, including the cryptocurrency market. This
impact was worsened by the exit of market maker from the jurisdiction, it added.
Earlier
this month, the US Securities and Exchange Commission sued Binance, the world’s
largest
cryptocurrency exchange by trading volume, accusing the firm and its CEO Changpeng
Zhao of operating an illegal trading platform, offering unregistered securities
and misusing client funds, among other allegations. The securities watchdog
followed this up by hitting Coinbase, the biggest crypto exchange in
the Unted States, alleging that it was offering unregistered securities on an
unauthorized trading platform.
In recent
months, the regulator also filed
a complaint against cryptocurrency exchange Bittrex for allegedly operating without
registration and forced Kraken to shut
down its
staking-as-a-service programme. Additionally, it charged crypto exchange Gemini
and crypto lender Genesis for allegedly offering
unregistered securities.
Largest BTC
Liquidations since FTX Collapse
According
to CCData, the recent regulatory pressure and other ‘macroeconomic pressures’ are
possibly responsible for shrinking liquidity in US crypto market. The firm noted
that 1% market
depth, or the ability of a crypto exchange to absorb a trade that is equal to
1% of its total trading volume, has declined significantly among US digital
asset exchanges since November. The depth for bitcoins shrank from
1500 BTC to 400 BTC, it added.
“The impact
differs among exchanges: OkCoin, Bittrex, Cexio, and BinanceUS have faced
significant liquidity declines of 97.6%, 99.2%, 70.6%, and 78.4% YTD,
respectively, with Bittrex and Binance.US encountering SEC actions,” the CCData explained.
Furthermore, SEC’s
charges against Binance announced on June 5 “set off a major wave of BTC-long
liquidations at a scale which hasn’t been seen since the collapse of FTX,” the digital asset data provider noted. Within an hour of the
announcement, aggregate open interest, or the total number of outstanding BTC futures or
options contracts that have not been settled, dropped by 4.51%.
“The
announcement caught bullish traders by surprise, particularly
affecting altcoins, such as Cardano and Solana, which were specifically
mentioned in the lawsuit and are now considered securities by the SEC,” CCData
elaborated. “These tokens experienced the most substantial declines.”
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- Source: https://www.financemagnates.com//cryptocurrency/btc-liquidity-halves-from-peak-before-ftx-collapse-amid-crypto-crackdown/
