Only 462 BTC required to move the price by 1%

The bear market and the US government’s Operation Choke Point 2.0 continue to leave their mark on the Bitcoin market. Liquidity has plummeted in recent weeks and months.

Barchart, a leading provider of real-time intraday charts of stocks and commodities, reports today that this trend is currently continuing, with market depth for BTC and the market’s most popular stablecoin, USDT, making a new 15-month low.

Market depth refers to the market’s ability to absorb large market orders without significantly affecting the price. The metric takes into account the total size and volume of open orders, bids, and offers.

At the end of April, it would have taken an order of just 462 BTC to move the asset’s price by at least 1% in either direction, according to CCData. According to Barchart, this is the lowest market depth for BTC-USDT since May 2022, when the leading cryptocurrency suffered a massive plunge in the wake of the COVID crash.

Bitcoin Liquidity | Source: Twitter @Barchart

Market data provider Material Indicators shared a chart yesterday showing that Bitcoin whales are currently being forced to split their large buy and sell orders into smaller orders due to high slippage due to low liquidity.

“If you’re wondering why yellow is buying BTC here and brown megawhales aren’t, then it’s probably not retail vs smart money. That’s because the liquidity is so low between here and $29.1k that the slippage on a whale-sized order would be significant, literally forcing them to place smaller orders,” the experts explained via Twitter, sharing the chart below.

Bitcoin Fire Chart | Source: Twitter @MI_Algos

Bitcoin stronger than the last bear market

The data provider recently shared similar data, although it also offers a glimmer of hope. Two days ago, Kaiko said trading volume on the central exchanges fell in April after rising for three straight months and topping pre-FTX levels in March.

On the bright side, however, the overall crypto market is significantly larger than it was before the 2020 bull market. Additionally, quarterly trading volume on Coinbase, the largest U.S. exchange, has stabilized at over $140 billion over the past three quarters. Despite this, it is still half of the annual average of 2021.

Monthly trading volume on CEXs | Source: Twitter @KaikoData

In terms of liquidity, however, Kaiko is also noting a deterioration as both Bitcoin and Ethereum near 1-year lows at a 2% market depth. One trend Kaiko is currently seeing is that perpetual futures are increasingly driving price action.

“Perp-to-spot volume is the highest in almost two years and price discovery is occurring in the derivatives markets,” notes Conor Ryder, a researcher at Kaiko. When asked in which direction the price of Bitcoin is going, Ryder states:

There was a huge build up of long positions in mid-April, but negative prices peaked as soon as funding flipped. OI [Open Interest] on a downtrend as remains mixed along with price and funding so no clear trend. But the chart shows how futures are really driving prices now.

At press time, bitcoin price is $29,220.

Bitcoin price 2 hour chart | Source: BTCUSD on TradingView.com

Featured image from iStock, chart from TradingView.com

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