Only 2% of cryptocurrencies have ‘healthy’ liquidity, says BitStacker

Only 2% of cryptocurrencies have ‘healthy’ liquidity, says BitStacker

As main crypto exchanges like FTX go bankrupt amid excessive volatility, nearly 90 per cent of cryptocurrencies have a low buying and selling quantity, with simply 2 per cent of crypto cash having a wholesome liquidity, a brand new examine has discovered.

There are solely 153 crypto cash with excessive quantity which might be traded in lots of exchanges. In distinction, there are 5,886 cryptocurrencies with very low quantity which might be traded in a really small quantity of exchanges, in line with the report compiled by BitStacker.

This reaffirms the truth that there may be unequal stability of buying and selling quantity among the many hundreds of cryptocurrencies and it offers a warning towards speculating on crypto cash with a low liquidity, the report talked about.

“The indisputable fact that so many cryptocurrencies endure from a low liquidity or buying and selling quantity is one other reminder of how dangerous it may be to take a position in some of the smaller crypto cash,” stated Kris Lucas, a analyst.

“After all, there may be nothing stopping an unregulated cryptocurrency change from creating statistics that overvalue a selected coin,” he added.

The researchers tracked 6,656 crypto cash, and solely 2.30 per cent of these cryptocurrencies had been categorized as having a very good liquidity.

Liquidity is a time period used to seek advice from the buying and selling quantity of an asset. The liquidity metric used within the examine goals to focus on these crypto cash that have a low each day buying and selling quantity, or these cryptocurrencies the place the trades happen in a really restricted quantity of exchanges.

“Such an understanding of liquidity is beneficial in that it may possibly clarify greater than one thing like market capitalization. In explicit, it may possibly assist merchants perceive when it could be troublesome to purchase or promote important portions of any crypto coin,” the report stated.

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