Market Depth for Bitcoin And Ethereum Reaches New Low Since FTX Collapse

There is growing unease in the major cryptocurrency markets. Bitcoin and Ethereum note a steep dropoff in bullish momentum. Moreover, Kaiko data confirms the market depth for both currencies looks pretty bleak, hitting a new low since the collapse of FTX. 

Where is the Bitcoin and Ethereum market depth?

It is remarkable to see the weak momentum affecting the two biggest cryptocurrencies by market cap. A shift in wind direction sends the markets tumbling, and no bullish news has come out for a while. Of course, some will argue neither of these currencies needs bullish news to see their price increase. Unfortunately, that isn’t how market rationale – or lack thereof – works. 

One contributing factor is the low market depth. Bids and asks within 2% of the median USDT-based pairs have dropped significantly. That trend initially began after the demise of the FTX exchange. However, the momentum got rekindled in late December 2022 and most of January 2023. Bitcoin and Ethereum had bullish spells then, although both currencies have slipped ever since. 

Market makers remain risk averse post FTX. #BTC and #ETH #liquidity (2% market dept) is down to its lowest level since the Terra collapse. pic.twitter.com/BpcqAaCItX

— Dessislava Ianeva (@DessislavaIane2) February 27, 2023

What is even more problematic is the overall market depth trend. While ups and downs are always present, the overall downtrend is problematic. The Kaiko data indicates market depth hit a new low after FTX’s demise. That was bound to happen eventually. In addition, that indicates 2023 will not be a bull market anytime soon. There may be some short-term momentum in the future, but no sustainable rally yet. 

When looking at the BTC trading volume, the trend becomes more outspoken. There are days with very high trading volume, although most activity is in the 10k BTC/day range. That is chump change for the world’s leading cryptocurrency and confirms the weak market depth. Coinbase remains the go-to exchange for trading BTC, followed by Kraken, Bitstamp, and Bitfinex. These are all pairs tied to fiat currencies and do not include stablecoin pairs. However, it confirms very little “fiat demand” for Bitcoin these days. 

Technicals Don’t Look Promising Either

One crucial factor in determining the future price direction of any asset is its technical indicators. The Fear & Greed Index for Bitcoin has flashed “Neutral” after a few weeks of “Greed”. Another confirmation the market has cooled down and may not see any momentum for a while. However, there shouldn’t be much bearish pressure either, as investors don’t need to sell immediately. 

The momentum looks similar for Ethereum. Its ETH/USDT market is currently in “Neutral” territory, even though the Moving Averages signal “Buy”. However, the Oscillators are “Neutral” too, yet the Momentum indicator is a clear “Sell” signal. In addition, the bull Bear Power has flipped to “Sell”, primarily due to less demand to purchase ETH with USDT. 

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