This Monday, The Block analyst Larry Cermak presented the results of a study of liquidity in the cryptocurrency space, during which he came to disappointing conclusions.
According to Cermak, as of December 20, 95% of the cryptocurrencies on the market had no liquidity, and 2% had very little liquidity.
The liquidity of an asset is understood to mean its ability to quickly be sold at or close to the market price. The analyst admits that identifying specific illiquidity metrics can be a daunting task and conservatively estimates it at less than $10,000 in the total volume of applications for a ten percent section of the order book.
“There are currently 351 cryptocurrencies that have less than $10k of combined orders; 94.6% of all cryptocurrencies are currently illiquid,” he writes. — “Most of shitcoins won’t die by going to 0 but by having no liquidity.”
If we exclude stablecoins from the calculations, it turns out that the most liquid cryptocurrencies are Bitcoin, Ethereum, EOS, Litecoin, XRP and Bitcoin Cash. At the same time, Bitcoin is five times more liquid than Ethereum, and 10 or more times than other cryptocurrencies.
Cermak expects that over time, the number of illiquid coins in the cryptocurrency market will only grow.
Arcane Research analysts previously suggested that when adjusting for liquidity, the real market share of Bitcoin may exceed 90%.
Author: Marko Vidrih
Images credit: The Block