The financial meltdown’s unexpected winner has been a bullish bitcoin. However, investors looking to increase their bets face a concerning barrier: a dearth of liquidity that could result in irrational price swings.
Since March 10, when news of Silicon Valley Bank’s (SVB) failure exploded into general markets, the price of the top cryptocurrency has increased 40%, reaching about $27,700.
On the other hand, its cash is dwindling.
According to data provider Kaiko, Bitcoin’s market depth shows the commodity is at its lowest level of liquidity in 10 months, even lower than following the FTX collapse in November. The market depth for the two most popular trading combinations, bitcoin-dollar and bitcoin-tether, is currently 5,600 bitcoin, or roughly $155 million, according to Kaiko.
Kevin de Patoul, CEO of Keyrock, said, “As a market maker, we try to provide liquidity where we can, but we’re confronting a difficult situation. “This has a significant network impact. At least temporarily, obtaining cash will be difficult.