Bitcoin Cash led Q3 liquidity growth, outperforming other cryptos, as detailed by Paris-based data firm, Kaiko.
In the cryptocurrency trading landscape of the third quarter, Bitcoin Cash (BCH) grabbed the spotlight. This Bitcoin offshoot displayed the most impressive surge in market liquidity, a finding shared by the renowned Paris-based crypto data analysis firm, Kaiko. While liquidity signifies a market’s capacity to manage vast buy and sell orders at consistent rates, its rise points to enhanced stability in trading.
Why Market Liquidity Matters in Crypto Trading
Liquidity plays a pivotal role in ensuring traders get the value they expect when executing their transactions. A highly liquid market minimizes slippage, the gap between the anticipated trading price and the actual one. This characteristic is particularly crucial for major players who place significant orders. The ability to conduct large-scale trades without drastic price changes can profoundly influence a trader’s decision on which cryptocurrency to invest in.
Kaiko determines its liquidity rankings by evaluating various factors. These include market depth metrics, the difference between buying and selling prices (bid-ask spreads), and data from exchanges deemed tradable. Since Alameda Research’s collapse in the previous November, the crypto industry noted a widespread reduction in market liquidity.
Bitcoin Cash’s Standout Performance in Q3
Bitcoin Cash stood out in the third quarter, improving its market liquidity by over 10%. This growth rate overshadowed even that of market forerunner Bitcoin and other notable altcoins. However, while its liquidity thrived, its price saw a dip. From a whopping 145% rise in Q2, the BCH price decreased by 23%, settling at $234 in Q3. Despite this setback, traders can still engage with BCH on major exchanges such as Binance, Coinbase, Bitstamp, and the institutionally supported EDX Markets.
Other cryptocurrencies, including Stellar’s XLM, TRON’s TRX, and Ethereum Classic (ETC), experienced enhanced liquidity conditions in Q3. On the other hand, cryptocurrencies like Bitcoin, Ether (ETH), XRP, and Dogecoin (DOGE) remained stable in their liquidity metrics. A few, including BNB Chain’s BNB, OKX exchange’s OKB, and Toncoin (TON), even faced a drop in their liquidity. Notably, TON faced challenges due to suspicions of artificial volumes on HTX, leading to its label as non-liquid across all exchanges by Kaiko’s quarterly assessment.