According to the latest analysis made by Bitcoin and cryptocurrency analysis company Glassnode, an interesting development emerges. Accordingly, as the demand for risky assets decreases, liquidity in the altcoin market dries up. The report shows that fundamental metrics for altcoins have reached cycle lows. It also shows that it underscores weakness in the market.
Liquidity emphasis for Bitcoin and cryptocurrencies
Glassnode points out that liquidity has decreased across Bitcoin and altcoin projects. He also notes that metrics such as network placement, stock market engagement and capital flows are currently at cycle lows. This trend reflects a general lack of interest in altcoins in the market.
The report shows that long-term holders remain committed as liquidity dwindles. On the other hand, he emphasizes that their supply has reached all-time high levels (ATH). HODLer growth also remains strong. This also tightens the active tradable supply. Despite significant price fluctuations in the altcoin market due to the low liquidity environment, Glassnode’s new altcoin framework shows that a risky regime is not at play. This indicates that Bitcoin and the cryptocurrency market are strong against turbulence.
BTC liquidity is also decreasing
Glassnode also highlights Bitcoin BTC’s “Hot Supply” metric, which measures the volume of coins traded over the past week. Accordingly, it points out that BTC market liquidity is at levels not seen since previous bear markets. This decline in market liquidity is especially evident when evaluating the Hot Supply metric. The report further explains this by comparing the Hot Supply to the long-term average of minus 0.5 standard deviations. When Hot Supply falls below this threshold, it signals periods of low and shrinking market liquidity. According to Glassnode, current liquidity conditions are similar to those experienced during the 2014-15 and 2018-19 bear markets. On the other hand, it has been going on for 535 days.
Liquidity in both altcoin and Bitcoin markets continues to decrease. On the other hand, investors are asked to be cautious. The landscape in the crypto market is changing. Additionally, these signals suggest that a risk-off approach may be more prudent in the current environment. When we look at the price of Bitcoin and altcoins while writing the article, we see that there are significant movements. Bitcoin is trading at $26,666. On the other hand, there is a 1.3% decrease in Ethereum. Accordingly, ETH is traded at $ 1,540. There is a significant increase in the altcoin named LOOM, which is listed on Binance, today. While writing the article, LOOM has increased by 14%. When we look at Kriptokoin.com, it is traded at $ 0.21.
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