Kaiko, a leading cryptocurrency market data provider, has released its latest research report, shedding light on the liquidity landscape of Ethereum (ETH) and highlighting the dominance of a few key exchanges.
The report indicates that 72% of ETH liquidity is concentrated on just five exchanges, marking a significant shift since the collapse of FTX last year.
Following the demise of FTX, the crypto market has faced challenges in maintaining adequate liquidity for assets. The shutdown of the Signet and SEN fiat settlement networks in the US severely impacted the operational efficiency of market makers.
It has been reflected in Ethereum’s 2% market depth, which experienced a decline in March and has struggled to recover to pre-FTX levels.
However, the .1% depth, which measures liquidity around the mid-price, has rebounded to surpass pre-FTX levels as market makers regain confidence in offering liquidity within a tight range.
The study highlights the concentration of order book liquidity on a handful of exchanges since FTX collapsed.
Ethereum: Shift in Liquidity from US-available Exchanges
Binance, Bitfinex, OKX, Coinbase, and Kraken collectively account for 72% of Ethereum’s market depth, while the remaining 41 exchanges represent only 28%. Before FTX’s collapse, the exchange and its US counterpart accounted for nearly 40% of the market depth.
Interestingly, the research also reveals a shift in liquidity away from US-available exchanges over the past year. The share of market depth on US exchanges has decreased to around 40%, down from a high of 54% before the collapse of Terra last May.
Global exchanges have benefited from regulatory crackdowns, attracting market makers seeking to avoid uncertainty.
Looking ahead, the report suggests that liquidity consolidation on a limited number of exchanges may continue for all assets, not just Ethereum, as the exchange space grapples with attracting market makers during an ongoing bear market.
In addition to the liquidity analysis, the report covers other notable trends in the crypto market. It discusses the stability of stablecoins amid the US debt ceiling drama, the outperformance of Curve DAO (CRV) and Synthetix Network (SNX) in the DeFi sector, the decline in MakerDAO’s liquidity following a large transfer to Binance, and the potential opportunities for OKX in Hong Kong’s upcoming virtual asset licensing regime.
The insights provided by Kaiko’s research offer valuable information for investors, traders, and industry participants seeking to navigate the ever-evolving crypto market.
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