Crypto markets continue to struggle with liquidity fragmentation, leading to persistent price gaps between exchanges.
According to a recent Kaiko report, this one The differences narrow over time but remain prominent on smaller, less liquid exchanges, especially during market events like last week’s recent sell-off.
Price slippage occurs when the expected price of a market order differs from the execution price and is an important liquidity indicator.
During the August 5 sell-off, Kaiko calculated that most exchanges showed larger slippage in their $100,000 Bitcoin (BTC) orders. Notably, the spike was much more pronounced on some exchanges and trading pairs.
Zaif’s BTC-JPY pair saw the biggest decline, while KuCoin’s BTC-EUR pair exceeded 5%. Meanwhile, the usually liquid stablecoin-listed pairs on BitMEX and Binance US also saw notable gains.
The report also highlighted that the impact on liquidity can vary not only between exchanges, but also between trading pairs within the same exchange. It added:
“For example, Coinbase’s BTC-EUR pair is significantly less liquid than the BTC-USD pair. This discrepancy can lead to extreme volatility during heightened market activity, as we saw in March when Coinbase’s BTC-EUR prices diverged significantly from the broader market and market depth plummeted.”
Additionally, BTC prices on Binance.US deviated significantly from the more liquid platforms as the platform faces reduced liquidity due to the SEC lawsuit in June 2023. Binance.US currently only handles $20 million in daily trading volume , compared to $400 million in early 2023.
Liquidity concentration has also increased during weekdays, especially in the BTC-USD markets, following the launch of spot Bitcoin exchange-traded funds (ETFs) in the US. This trend increases the risk of sharp price swings on weekends during market stress.
Despite these challenges, crypto platforms have invested heavily in infrastructure, allowing them to handle higher trading volumes without interruption. During the recent sell-off, BTC-USD and BTC-USDT trading numbers reached record highs on Bybit and reached post-FTX collapse levels on Coinbase.
Bitcoin Market Data
At the time of printing 23:09 UTC on August 12, 2024Bitcoin is number 1 in terms of market capitalization and so is its price down 0.04% in the last 24 hours. Bitcoin has a market capitalization of $1.17 trillion with a 24-hour trading volume of $37.25 billion. Learn more about Bitcoin ›
Summary of the crypto market
At the time of printing 23:09 UTC on August 12, 2024the total crypto market is valued at € $2.09 trillion with a 24-hour volume of $83.08 billion. Bitcoin’s dominance currently stands at 55.84%. Learn more about the crypto market ›