Only 462 BTC Needed To Move Price By 1%
The bear market and the US government’s Choke Point 2.0 operation continue to leave their mark on the Bitcoin market. Liquidity has plummeted in recent weeks and months.
Barchart, a leading provider of real-time intraday charts for stocks and commodities, reports today that this trend continues today, with market depth for BTC and the market’s most popular stablecoin, USDT, hitting new 15-month lows.
Market depth refers to the market’s ability to absorb large market orders without significantly affecting price. The metric takes into account the total size and volume of orders, bids, and open offers.
By the end of April, according to CCData, it would take an order of just 462 BTC to move the asset’s price by at least 1% in either direction. According to Barchart, this is the lowest market depth for BTC-USDT since May 2022, when the leading cryptocurrency took a massive plunge following the COVID crash.
Market data provider Material Indicators shared a chart yesterday showing that Bitcoin whales are currently forced to split their large buy and sell orders into smaller orders due to high slippage resulting from low liquidity.
“If you’re wondering why the yellow is buying BTC here and the brown mega whales aren’t, it’s probably not retail versus smart money. It’s because the liquidity between here and $29,100 is so small that slippage on a whale-sized order would be significant, so they are literally forced to place smaller orders,” the experts explained via Twitter, sharing the chart. below.
Bitcoin stronger than the last bear market
The data provider has shared similar data recently, though it also offers a glimmer of optimism. Two days ago, Kaiko said that trading volumes on central exchanges fell in April, after rising for three consecutive months and surpassing pre-FTX levels in March.
On the bright side, however, the crypto market as a whole is significantly larger than it was before the 2020 bull market. Additionally, quarterly trading volume on Coinbase, the largest US exchange, has stabilized above $140 billion in the last three quarters. Despite this, however, it is still half of the 2021 average.
In terms of liquidity, however, Kaiko also sees a deterioration, with Bitcoin and Ethereum approaching one-year lows at 2% market depth. One trend that Kaiko is currently seeing is that perpetual futures are increasingly driving price action.
“Perp-to-spot volume is the highest in nearly 2 years, and price discovery is taking place in derivatives markets,” notes Conor Ryder, researcher at Kaiko. On the question of which direction Bitcoin price is trending, Ryder states:
There was a large buildup of long positions in mid-April, but once the funding turned negative, prices peaked. HEY [Open Interest] in a downtrend as along with price funding remains mixed so no clear trend. But the chart shows how futures are actually driving prices right now.
At press time, Bitcoin price was at $29,220.
Featured Image from iStock, chart from TradingView.com