The recent crisis that hit several US technology banks had a significant impact on US cryptocurrency exchanges. In fact, market liquidity here has fallen to a 10-month low. And this despite a positive price development of Bitcoin in the last quarter.
The liquidity depletion has been attributed in part to bank runs in the United States and ongoing regulatory action against cryptocurrency companies. Despite this, Bitcoin’s price is up nearly 45% since the start of the year. This makes Bitcoin the best performing asset this year. This is in contrast to stocks and bonds, among other things. These traditional markets are clearly showing the first signs of a financial crisis.
Liquidity crisis in the US stock markets
As the financial crisis unfolded, several US banks went bankrupt, impacting the cryptocurrency market. For example, large payment systems that facilitated dollar-to-crypto transactions disappeared with the collapse of crypto-friendly banks such as Silicon Valley Bank and Signature Bank. And that, according to research by Kaiko, an on-chain data analysis company, has led to a liquidity crisis, especially on the US stock exchanges.
Result 1: more slide
The liquidity crisis of these exchanges in turn led to increased price volatility of cryptocurrencies such as Bitcoin. As a result, traders are currently forced to pay a higher fee for slippages. Slippage refers to the difference in price between the expected price of a trade when it appears on the exchange and the price at which that trade was executed strictly speaking Has been realized.
For example, a $100,000 sell order saw the BTC/USD pair on America’s largest cryptocurrency exchange – Coinbase – rise 2.5-fold in early March. During the same period, the derailment of the BTC/USDT pair on the world’s largest cryptocurrency exchange was the No based in America – ie Binance – virtually none.
Consequence 2: Greater price volatility
In addition, the US liquidity crisis has led to greater price volatility on US exchanges than on non-US exchanges as a result of the recent banking crisis. For example, the BTC price on Binance.US is more volatile than the average price on 10 other exchanges.
Source: Btc Direct
Barry Siefert is an accomplished journalist and author at The Nation View. He is known for his expertise in the field of cryptocurrency, and has written extensively on the topic. With a background in finance and economics, Barry has a deep understanding of the underlying technology and market forces that drive the crypto industry.
