'Structural Shift': Can Crypto Trading Ever Recover After October's Liquidity Crash?
Despite calmer prices, crypto liquidity remains structurally thin after October's crash, risking sharper and more volatile price swings.Summary
Data from CoinDesk Research indicates that market depth for Bitcoin and Ether on major centralized exchanges remains significantly lower following the October leverage wipeout, suggesting a structural shift rather than a temporary dip. Bitcoin's average cumulative depth at 1% from the mid-price fell by nearly one-third, and Ether showed a parallel decline. Analysts conclude this reflects a deliberate reduction in market-making commitment, establishing a new, lower baseline for stable liquidity. This thin liquidity environment increases the likelihood of outsized price swings from routine trading flows and makes the system vulnerable to liquidation cascades. In contrast, major altcoins experienced a sharp but temporary liquidity collapse, quickly restoring orders, though still not to pre-crash levels. The cautious market-making stance is further influenced by a macro environment marked by ETF outflows and uncertainty regarding Federal Reserve policy, meaning the crypto market is currently more fragile than price charts suggest.
(Source：CoinDesk)