Data from Kaiko shows that Crypto’s USD market depth has dropped significantly over the past month after Silvergate’s struggles.
US exchanges are less liquid.
Kaiko said U.S.-based exchanges and market makers appear to be the hardest hit by the Silvergate implosion, resulting in lower liquidity.
According to Kaiko data, Bitcoin and Ethereum market depth have improved across international exchanges such as Binance, OKX and ByBit in the last 30 days. However, during the same period, he did worse on US-based exchanges such as Coinbase and Kraken.
Cryptocurrency market liquidity measures how the market can absorb a large number of buy and sell orders without significantly affecting the price.
On-chain data aggregators have noted that the USD liquidity level is close to that of the Binance USD (BUSD) stablecoin. But when New York’s financial regulator ordered the asset’s issuer, Paxos, to stop issuing more mints, the liquidity of the top BUSD pair had fallen by as much as 40%.
BUSD’s liquidity levels are starting to improve slightly, but Kaiko said the news of Silvergate is “putting pressure on the US dollar pair,” approaching levels of the stablecoin in question.
Meanwhile, lower liquidity across US exchanges appears to have contributed to slightly negative market depth for ETH and BTC over this period.
Silvergate’s Role in Crypto US Dollar Liquidity
The drastic drop in US dollar liquidity demonstrates the role of Silvergate as a bridge between the traditional financial system and the cryptocurrency industry.
The bank’s Silvergate Exchange Network (SEN) processed more than $219 billion in remittances at its peak, reportedly generating $9.3 million in revenue in the fourth quarter of the 2021 market rally.
Major cryptocurrency companies such as Coinbase, Gemini, Paxos and Circle have used the service. Unfortunately, these financial institutions were forced to close their banks due to concerns about their ability to continue operations.
Altcoins Affected
Meanwhile, worsening liquidity appears to be affecting altcoins on several exchanges.
Kaiko’s data is based on the fact that several exchanges lost more Altcoins such as Cardano’s ADA, Polygon’s MATIC, Dogecoin’s DOGE, Solana’s SOL, and Polkadot’s DOT exceeded 15% of market depth over the last 30 days.
According to the data, the least affected exchange was Coinbase, where the depth of these crypto assets decreased by 14%, while other exchanges such as Bybit and Kraken each decreased by 17%. Binance and its US subsidiary each fell 20%, while Huobi lost 35% of his.
Euro volume rises against the US dollar.
Kyko data shows that while US dollar liquidity is declining against the cryptocurrency market, the European Union’s euro is gaining ground against Bitcoin.
travel It pointed out Since the collapse of FTX in November 2022, the euro’s volume against the US dollar has nearly doubled. According to the company, Euro volume has increased from 9% of his BTC market to 16%.
The increase in euro trading volume coincides with the rise of euro-backed stablecoins. As a result, the top two stablecoin issuers, Tether and Circle, have introduced euro-backed stablecoins to gain market share.
