An expert from crypto research company Kaiko, told the press that some companies that decided to withdraw as a result of regulatory pressure may have a negative impact on Bitcoin liquidity.
Riyad Carey, a crypto analyst working at Kaiko, emphasized that after the Alameda and FTX bankruptcies, Bitcoin liquidity could not approach the old levels, saying:
"The data is normal considering the latest developments. The situation faced by the two biggest market makers of the crypto money industry is causing increased pressure on liquidity. No one has been able to fill the gap left by Alameda."
As a result of increasing regulation pressure in the USA, giant market makers Jane Street and Jump Trading decided to cease their activities in the country. While Jump Trading focuses more on other countries, Jane Street is downsizing.
According to the chart shared by Kaiko analyst, BTC liquidity did not return to its former level after the FTX exchange went bankrupt.
What Does Liquidity Mean?
Simply put, liquidity is a measure of how well the buyers and sellers of the product match up in a trade. In low liquidity markets, volatility is more visible, while in high liquidity markets, traders are more easily matched.
