Since the introduction of spot ether ETFs in the U.S. on July 23, liquidity in the ether market has decreased significantly. The average 5% market depth for ETH pairs on U.S.-based exchanges has dropped by 20%, now around $14 million.
On offshore platforms, this figure has fallen by 19%, bringing it to about $10 million. This decline indicates that the market is less able to handle large buy and sell orders without affecting the spot price, showing weaker liquidity and higher sensitivity to large trades.
Recent weeks have seen troubling trends. Bitcoin, often seen as a market indicator, has had difficulty maintaining its momentum. Ethereum, which had shown some resilience, is now also facing bearish pressure.
Let’s figure out what’s causing such jitters in the market!
Reasons Behind the Liquidity Drop
The decline in liquidity is due to poor market conditions and the lower trading activity typical of summer months. Despite expectations that ETFs would improve market liquidity—similar to the positive impact observed in bitcoin after its ETF launch in January—the results for ether have been different.
Jacob Joseph, a research analyst at CCData, pointed out that liquidity for ETH pairs is now nearly 45% lower than its peak in June. This suggests that the expected benefits of ETFs for ether have not been realized.
Additionally, the ether ETF market has seen over $500 million in outflows since its launch, adding to the negative sentiment. Ether’s price has also dropped more than 25%, now at $2,380. This price decline and reduced liquidity highlight the ongoing challenges for ether despite the new ETFs.
Looking Ahead
If central banks continue to ease their policies, we might see significant inflows into BTC, ETH ETFs, and major cryptocurrencies.
Also Check Out: Japan’s MUFG Bank Unveils 2025 Stablecoin Revolution: ‘Project Pax’!
What do you think this means for the future of altcoins?