{"id":70417,"date":"2022-11-22T11:29:14","date_gmt":"2022-11-22T09:29:14","guid":{"rendered":"https:\/\/forklog.com\/en\/?p=70417"},"modified":"2025-09-08T02:11:31","modified_gmt":"2025-09-07T23:11:31","slug":"experts-flag-reduced-liquidity-in-the-crypto-market-after-the-ftx-collapse","status":"publish","type":"post","link":"https:\/\/forklog.com\/en\/experts-flag-reduced-liquidity-in-the-crypto-market-after-the-ftx-collapse\/","title":{"rendered":"Experts flag reduced liquidity in the crypto market after the FTX collapse"},"content":{"rendered":"<p>The ability to execute large trades in digital assets without noticeably moving their prices has fallen markedly after<a href=\"https:\/\/forklog.com\/en\/news\/ftx-group-files-for-bankruptcy-sam-bankman-fried-resigns-as-ceo\"> the FTX collapse<\/a>., according to Kaiko analysts.<\/p>\n<blockquote class=\\\"twitter-tweet\\\">\n<p lang=\\\"en\\\" dir=\\\"ltr\\\">A bright spot amid the FTX contagion: <a href=\\\"https:\/\/twitter.com\/hashtag\/BTC?src=hash&#038;ref_src=twsrc%5Etfw\\\">#BTC<\/a> liquidity has improved\ud83d\udcc8<\/p>\n<p>Since last week, 2% market depth has recovered to ~10k BTC.<\/p>\n<p>Our latest analysis: <a href=\\\"https:\/\/t.co\/vSAc8wvN68\\\">https:\/\/t.co\/vSAc8wvN68<\/a> <a href=\\\"https:\/\/t.co\/fVsnFYrw2d\\\">pic.twitter.com\/fVsnFYrw2d<\/a><\/p>\n<p>\u2014 Kaiko (@KaikoData) <a href=\\\"https:\/\/twitter.com\/KaikoData\/status\/1594773641367003136?ref_src=twsrc%5Etfw\\\">November 21, 2022<\/a><\/p><\/blockquote>\n<p> <script async=\\\"\\\" src=\\\"https:\/\/platform.twitter.com\/widgets.js\\\" charset=\\\"utf-8\\\"><\/script><\/p>\n<blockquote class=\\\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\\\">\n<p><em>\u201cThere are only a handful of market makers dominating the cryptocurrency market, including Wintermute, Amber Group, B2C2, Genesis, Cumberland and Alameda, now-defunct. With the loss of the latter we can expect a significant drop in liquidity, which we have named the Alameda gap,\u201d<\/em> \u2014 the analysts said.<\/p>\n<\/blockquote>\n<p>They estimate that the depth of order books on Kraken, Binance and Coinbase fell by 57%, 25% and 18%, respectively, in the wake of the Sam Bankman-Fried incident.<\/p>\n<div class=\\\"wp-block-image\\\">\n<figure class=\\\"aligncenter\\\"><img decoding=\\\"async\\\" src=\\\"https:\/\/www.tbstat.com\/wp\/uploads\/2022\/11\/Unknown.png\\\" alt=\\\"Experts point to a drop in crypto market liquidity after the FTX collapse\\\"\/><figcaption>Dynamics of buy and sell order volumes within 2% of the mid price in BTCUSD(T) pairs on FTX and 17 cryptocurrency exchanges (aggregated). Data: Kaiko.<\/figcaption><\/figure>\n<\/div>\n<p>Weekly volumes on Bitcoin exchanges collapsed to around $100 billion. The steepest declines were in Huobi, Bitfinex and BitMEX metrics.<\/p>\n<div class=\\\"wp-block-image\\\">\n<figure class=\\\"aligncenter\\\"><img decoding=\\\"async\\\" src=\\\"https:\/\/miro.medium.com\/max\/700\/0*tYwOtm3xE8tdVr-4.png\\\" alt=\\\"Experts point to a drop in crypto market liquidity after the FTX collapse\\\"\/><figcaption>Data: Kaiko.<\/figcaption><\/figure>\n<\/div>\n<p>The deterioration in market conditions affected L1 assets the most, with DeFi tokens to a lesser extent.<\/p>\n<div class=\\\"wp-block-image\\\">\n<figure class=\\\"aligncenter\\\"><img decoding=\\\"async\\\" src=\\\"https:\/\/miro.medium.com\/max\/700\/0*q2Rqvbwlz5TdvYbZ.png\\\" alt=\\\"Experts point to a drop in crypto market liquidity after the FTX collapse\\\"\/><figcaption>Data: Kaiko.<\/figcaption><\/figure>\n<\/div>\n<p>In a discussion with The Block, Wintermute CEO Evgeny Gaevoy explained the liquidity decline as the result of market makers revising their positions on certain platforms.<\/p>\n<blockquote class=\\\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\\\">\n<p><em>\u201cThere are two factors that explain the situation. On one hand, large market participants have less access to bitcoin loans, since most lenders are overly cautious or simply insolvent. At the same time they aggressively reduce their risk on most exchanges, as the full extent of contagion remains unclear,\u201d<\/em> he explained.<\/p>\n<\/blockquote>\n<p>Binance<a href=\"https:\/\/forklog.com\/en\/news\/wsj-binance-declines-to-rescue-genesis-global-capital\"> refused to rescue Genesis Global Capital<\/a>, according to The Wall Street Journal.<\/p>\n<p>On November 14, the lending platform sought emergency access <a href=\"https:\/\/forklog.com\/en\/news\/genesis-global-capital-sought-emergency-financing-of-1-billion-reports-say\">to a $1 billion credit line<\/a>, citing a liquidity shortage. The request came before <a href=\"https:\/\/forklog.com\/en\/news\/genesis-global-capital-suspends-crypto-lending-operations\">the suspension<\/a> of withdrawals and the issuance of new loans following the FTX collapse.<\/p>\n<p>Earlier, amid Genesis freezing lending operations and Grayscale&#8217;s refusal to disclose reserves within the community, doubts arose about the resilience of DCG itself.<\/p>\n<p>Previously at Multicoin Capital <a href=\"https:\/\/forklog.com\/en\/news\/multicoin-forecasts-imminent-collapse-of-trading-firms-amid-ftx-fallout\">predicted the imminent collapse<\/a> of trading firms due to FTX and said they expected to hear further statements from industry participants about problems.<\/p>\n<p>Read ForkLog\u2019s Bitcoin news in our <a href=\\\"\/\/telegram.me\/forklog\\\"\u201d\\\" target=\\\"\u201c_blank\u201d\\\" rel=\\\"\u201cnofollow\u201d noopener\\\">Telegram<\/a> \u2014 cryptocurrency news, prices and analytics.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Kaiko analysts say that the ability to execute large trades in digital assets without moving prices has fallen markedly after the FTX collapse.<\/p>\n","protected":false},"author":1,"featured_media":70418,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"select":"1","news_style_id":"1","cryptorium_level":"","_short_excerpt_text":"","creation_source":"","_metatest_mainpost_news_update":false,"footnotes":""},"categories":[3],"tags":[1435,1261,1145],"class_list":["post-70417","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news-and-analysis","tag-alameda-research","tag-kaiko","tag-market-analysis"],"aioseo_notices":[],"amp_enabled":true,"views":"17","promo_type":"1","layout_type":"1","short_excerpt":"","is_update":"","_links":{"self":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts\/70417","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/comments?post=70417"}],"version-history":[{"count":1,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts\/70417\/revisions"}],"predecessor-version":[{"id":70419,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts\/70417\/revisions\/70419"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/media\/70418"}],"wp:attachment":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/media?parent=70417"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/categories?post=70417"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/tags?post=70417"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}