According to Kaiko, a Paris-headquartered crypto analytics firm, Bitcoin Cash led the charge in liquidity gains throughout Q3, leaving other cryptocurrencies trailing behind.
Demystifying Liquidity and Its Market Impact
Liquidity—essentially the market’s knack for handling sizable buy and sell orders without causing drastic price swings—directly influences trading smoothness. The deeper the market, the smaller the slippage, which is the gap between a trader’s expected price and the final execution price. This dynamic makes it much more feasible for large-scale players to move significant volumes without shaking the market.
Kaiko’s Methodology: How Liquidity Is Measured
Kaiko’s liquidity assessments hinge on a blend of market depth analytics, bid-ask spreads, and trading volumes recorded exclusively on “tradable” exchanges. Since the collapse of Alameda Research in November last year, the crypto space has endured a widespread drought in liquidity, impacting overall market fluidity.
Quarterly Highlights: Bitcoin Cash Outpaces Rivals
Outshining its altcoin peers and even Bitcoin itself, Bitcoin Cash’s liquidity climbed by over 10% compared to Q2 figures, a noteworthy feat amidst prevailing market pressures.
However, Bitcoin Cash’s price trajectory during this period took a hit, retracting 23% to settle around $234 after an explosive 145% rally in the previous quarter. Ranking as the 17th largest digital asset by market capitalization, Bitcoin Cash enjoys listings on heavyweight centralized platforms such as Binance, Coinbase, Bitstamp, and the institutionally geared EDX Markets.
Liquidity Movements Among Other Digital Assets
- Stellar’s XLM, TRON’s TRX, and Ethereum Classic (ETC) also saw better liquidity conditions during Q3.
- Conversely, Bitcoin (BTC), Ether (ETH), XRP, and Dogecoin (DOGE) experienced stagnant liquidity levels.
- BNB Chain’s BNB, OKX exchange’s OKB, and Toncoin (TON) faced declines in liquidity measurements.
One particular case, TON, registered the weakest performance relative to its market capitalization. Most of TON’s trading volume originated from HTX, an exchange excluded from Kaiko’s data due to suspected wash trading activity, rendering TON effectively illiquid across the analyzed venues.
Despite the shifting landscape, Bitcoin maintained its crown as the most liquid cryptocurrency, reinforcing its status as the market’s go-to sanctuary amid turbulence.
Additional Market Context
To provide some perspective, Bitcoin’s average daily trading volume in Q3 hovered around $30 billion, dwarfing most altcoins and underscoring its dominant presence. Meanwhile, Bitcoin Cash averaged approximately $500 million in daily volume, reflecting its growing but still niche liquidity footprint.
