[2019-11-13] Crypto Space Has Shockingly Low Total Liquidity of $500 Million

[1Referee]

We all know more than 90% altcoins are joke. Suppose I have 500K Waves which worth around $350K in present market. CMC says market volume is $11M which means me selling 500K WAVES shouldn't have much effect on the market price because it's just 3% of the market volume. But dare I sell those 500K WAVES and believe me market will crash like hell, it is possible that market price of Waves will fall below $0.40 from present $0.75

It's actually much worse than you think. At Binance, which is the exchange with the highest altcoin liquidity, market selling 500,000 waves will result in the price to flash crash to below $0.10 which just shows how difficult it is to exit at once with these altcoins if you have a large position.

I stopped believing alts all together now, these are joke. It's better to stick with Bitcoin and work for the development of Bitcoin as universally accepted currency/asset rather than trying to make profits out of shitcoins having no real value and utility.

Nothing wrong with trading altcoins left and right with proper risk management, but the problem is that you can't possibly know what coin to choose beforehand in current market. In 2017's bull run you could blindly buy an altcoin and still make 500-1000% profit, but that doesn't work anymore. Retailers are rekt and they might not come back anymore for a similar pump.

[Kakmakr]

I think liquidity is only a problem when you cannot control it, but as we have seen during the 2017 "boom" period, exchanges just fake a "system overload" when things get out of control and then they blame it on capacity issues. This is very similar to the Banks closing their doors when there are a Bank run.

I think exchanges are no more liquid than most Banks or other financial industries and this has become the norm with most of these centralized operations. 

[magneto]

The sheer lengths that these people are willing to go to in order to discredit and slander BTC in the slightest way

It's obvious what they are presenting is a fallacy, but when presented to the untrained eye, they can obviously fool some people and inspire FUD regarding the crypto market not having sufficient liquidity to fulfill everyone's transactional needs.

The truth is really the opposite - cryptos are much more liquid compared to even forex to the average consumer/investor, with much lower spreads and faster clearance times - you name it.

[gentlemand]

The truth is really the opposite - cryptos are much more liquid compared to even forex to the average consumer/investor, with much lower spreads and faster clearance times - you name it.

Erm, how did you end up with that conclusion? Though I think this particular figure is a bit silly I don't disagree with the overall gist.

The crypto market is a piddly weakling at present. There are many, many more vested interests in stocks and forex so it could be argued that those markets are less organic than something that collapses in a few minutes on the basis of raw panic, but either way crypto is still a minnow.

It's kind of unhelpful to compare the present to normal markets, but the same goes for the height of bubbliness too. I'm looking forward to much less boom and bust but am wondering when and if it'll arrive.

[audaciousbeing]

https://cryptoiq.co/the-crypto-space-has-shockingly-low-total-liquidity-of-500-million-or-less-and-numerous-top-exchanges-caught-faking-their-volume/

It's extremely silly measuring liquidity entirely by what's on order books, plenty more will be sitting on the sidelines. Also with things as comatose as they've become it won't bear any resemblance to the more muscular periods of time.

All the same there are some pretty comical figures such as - Bibox that has volume of $1.05 billion and liquidity of $300,000, ZB that has volume of $483 million and liquidity of $310,000.

I will guess that the real figures for most of the exchanges clogging up the scene probably require another two zeroes removing, or just a good old zero.

This is just one aftermath of non-regulation in the market that gives room for people to manipulate others into making a decision in which they are not capable of doing. This is something that really be frowned upon but unfortunately, we will only make comments and there is nothing to be done about it. The next exchange site is probably doing the same thing. While companies operating in the economy might one way or the other wants to make their book looks good, liquidity is something they don't touch because that is one thing that could really be verified just by circulating the banks and this makes them careful but companies operating in crypto, its just a free for all and that what they are taking advantage of.

[DooMAD]

The crypto market is a piddly weakling at present. There are many, many more vested interests in stocks and forex so it could be argued that those markets are less organic than something that collapses in a few minutes on the basis of raw panic, but either way crypto is still a minnow.

Perhaps.  But, arguably, the traditional markets have a much greater dependency on HFT.  I'm still curious what will happen with everyone's preconceived notions about the importance of liquidity when a government somewhere inevitably implements one of those "Robin Hood Tax" systems that make them pay per trade.  That way, rather than spamming thousands of trades per second to target a desired price, they'll be forced to wait until the genuine price they want to buy or sell at.  I'm sure it'll have a profound effect on market rigging, price discovery and overall trade volumes in general.

And, since crypto generally doesn't play by the rules, it's unlikely exchanges would be in any hurry to implement such a tax, if ever.  Perhaps that would tempt some of the traditional traders to head on over to our side and bump up the numbers a little, heh.