February is ending, but the ‘Alameda Gap’ is not.
As the second month of this year comes to an end, the prices in the crypto market have somewhat recovered from last year’s crash. Still, the so-called ‘Almeida Gap’ resists filling, as liquidity is notoriously far from the levels seen before. ftx collapse.
Researcher Caco Tweeted that the gap persists even this month bitcoin (btc) “Market depth is still well below November levels.” It states that,
“BTC-USD (T) volume in bids and within 2% of the mid-price on 16 exchanges hovered around 8k BTC in February – 40% lower than in October.”
As a reminder, FTX Exchange, along with its parent company Alameda Research and many assistants, filed for bankruptcy back last November — and these companies, along with the founder Sam Bankman-FriedHave been dealing with regulatory and legal mess ever since (at the expense of users).
Caco noted The existence of the ‘Almeida Gap’ in the same month, arguing that, typically, liquidity declines occur during periods of volatility as market makers rush to manage risks.
“Crypto liquidity is dominated by only a few trading firms, including wintermute, Amber Group, b2c2, Produce, Cumberland and (now deceased) Almeida. With the loss of one of the largest market makers, we can expect a significant drop in liquidity, which we will call the “Almeida Gap,” it said at the time.
Riyad Carey was a research analyst at the company. Quoted As told by Bloomberg on Friday,
“It’s not just Alameda, though they were one of the biggest. Other market-makers took a hit and are becoming more cautious. […] It really depends on the coin, but I would say there is still a 20-40% gap from previous liquidity levels. When there is less liquidity, we see prices being more volatile in either direction, as has been the case over the past few months.”
Strahinja Savić, Head of Data and Analytics FRNT Financialwas quoted as saying three arrows capitaAle (3ac, Celsius Network, “and many other crypto funds, both well-known and not,” are responsible for this difference. Therefore, a drop in trading volume in late 2022 could likely be linked to the “elimination” of these companies.
“These firms would have controlled spreads, kept them at bay, and supported market depth,” Savic said, but their decline resulted in “an increase in some inefficiencies in the crypto market.”
“It also results in the Genesis bankruptcy, and losses for other market makers related to both Genesis and FTX,” argued Vetel Lunde, senior analyst. K33 Research (formerly Arcane Research).
the merchant hasn’t returned yet
Overall, according to Noel Acheson, author of the “Crypto Is Macro Now” newsletter, thin liquidity suggests that large traders have not returned to the market.
Acheson was quoted by Bloomberg as saying,
“I expect that the continued climb in volatility since the start of the year will gradually bring some of the larger players back into the market, as the December-early January lows may not have made the market interesting enough for them to be worth . Time.”
Meanwhile, in its weekly market overview, KAICO where did it go That the daily trading volume has been consistently high this year. It fell to a yearly low at the end of 2022, partly due to poor sentiment in retail following the collapse of FTX.
That said, it looks like sentiment has turned “significant” so far in 2023, with daily BTC volume surpassing $14 billion during February.
The researcher said that,
“The overall level of volume is also higher compared to late 2022, seemingly anchored to the $10bn daily volume number, in contrast to the roughly half that was locked in last year.”
Caco also noted that BTC and ETH market depth has reached its lowest levels since May 2022.
It added that BTC on 15 centralized exchanges fell 2% to a market depth of 6,800 BTC, almost three times lower than the October high. The market depth for ETH dropped to around 57,000 ETH compared to 139,000 ETH in October.
As for the price, back in November, BTC dropped to the $15,700 level but has since climbed up to the current $23,283. At 10:00 UTC on Tuesday, it was down 0.5% on the day and 6% over the past week.
At the same time, ETC was trading at $1,621, down 1% over the past 24 hours and 4.7% over the past 7 days. This is a significant increase since November 2022 when it fell to $1,095.
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