The cryptocurrency market continues to endure from fragmented liquidity, resulting in persistent worth discrepancies between exchanges.

Current Silkworm Report, these Whereas the hole has narrowed over time, it’s nonetheless noticeable on smaller, much less liquid exchanges, particularly throughout market occasions just like the sell-off seen final week.

Value slippage happens when the anticipated worth of a market order differs from the execution worth and is a crucial liquidity indicator.

Kaiko calculated that the majority exchanges noticed elevated slippage on $100,000 Bitcoin (BTC) orders throughout the Aug. 5 sale, with some exchanges and buying and selling pairs particularly seeing rather more pronounced spikes.

Zaif's BTC-JPY pair skilled essentially the most slippage, whereas KuCoin's BTC-EUR pair fell by over 5%, whereas common extremely liquid stablecoin pairs on BitMEX and Binance US additionally noticed notable will increase.

The report additionally highlighted that the affect on liquidity could fluctuate not solely throughout exchanges, but in addition between buying and selling pairs inside the identical change.

“For instance, the BTC-EUR pair on Coinbase is notably much less liquid than the BTC-USD pair. This mismatch can result in excessive volatility in periods of excessive market exercise, as was seen in March when the worth of BTC-EUR on Coinbase diverged considerably from the general market, inflicting market depth to plummet.”

Moreover, the BTC worth on Binance.US has diverged considerably from extra liquid platforms because the platform's liquidity has decreased following the SEC's June 2023 lawsuit. Binance.US at present has a each day buying and selling quantity of simply $20 million, down from $400 million in early 2023.

The BTC-USD market particularly has seen elevated weekday liquidity focus following the launch of a spot Bitcoin exchange-traded fund (ETF) within the U.S. This pattern will increase the danger of sharp worth actions over weekends throughout occasions of market stress.

Regardless of these challenges, cryptocurrency platforms are investing closely of their infrastructure to make sure they’ll deal with elevated volumes with out outages. Throughout the latest providing, BTC-USD and BTC-USDT buying and selling volumes hit all-time highs on Bybit and reached post-FTX collapse ranges on Coinbase.

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