The Liquidity in Crypto is falling further since the FTX collapse with no signs of recovery. A reason why there will be a lot more volatility coming up.

Our recent sharp rally from $27k to $30k and even sharper fall to $27k back in just one hour, or even our big rally from $19k to over $25k as the banks were collapsing a few weeks back, all are good examples of how much volatility the markets are having to the upside and the downside right now. All of that while we are still pretty much in a bear market where most people have left Crypto and only a few remained here.

So, what does cause such a volatility in a current bear market? Obviously it could be whales, but we have comprehensive data to also think otherwise:

A major issue in this bear market has become Liquidity, especially since the collapse of FTX, which was still one of the biggest exchanges and left a big hole in the market. All of that coupled with regulatory uncertainties, ongoing bear market with falling Trading Volumes.

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Liquidity Charts from Kaiko

Firstly, what is even liquidity? A quick explanation would be that it is “ease we have to buy and sell on exchanges“, meaning that the bid and ask prices by sellers and buyers have to be pretty close and in the case of Crypto it is also about having enough supply on exchanges, which is not really granted as Bitcoin Supply on exchanges has been in a literal free fall.

This may explain for all of you why there may be more volatility coming up in the days ahead until we improve our trading volume. We should expect such $2.5k BTC increases or decreases in a few hours under the current circumstances, so be ready and well aware.