Liquidity Struggles Plague Crypto Markets Amid Banking Upheaval

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Liquidity concerns rise in crypto markets due to banking sector collapses and payment network closures.
Strained liquidity in U.S. exchanges is evident through market depth, spreads, slippage, and trading volumes.
A new payment network could restore liquidity, reduce volatility, and attract new investors to crypto.

Liquidity concerns in the cryptocurrency markets have been growing, and recent collapses in the banking sector have only served to exacerbate an already precarious situation. Analyst Conor Ryder from Kaiko Research addressed this issue in a recent blog post, examining market depth, spreads, slippage, and volumes as key indicators of liquidity in the crypto markets.

According to Ryder’s analysis, the closure of the SEN network and Silvergate’s Signet payment network — both crucial for market makers in the space — has further strained liquidity. His examination of market depth shows that neither Bitcoin nor Ethereum has seen improvements in native units, with liquidity levels at their lowest in 10 months.

Spreads have also become more volatile due to banking issues, particularly affecting USD-linked exchanges and pairs. Ryder notes that the lo…

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