As main crypto exchanges like FTX go bankrupt amid excessive volatility, nearly 90 per cent of cryptocurrencies have a low buying and selling quantity, with simply 2 per cent of crypto cash having a wholesome liquidity, a brand new examine has discovered.
There are solely 153 crypto cash with excessive quantity which might be traded in lots of exchanges. In distinction, there are 5,886 cryptocurrencies with very low quantity which might be traded in a really small variety of exchanges, in accordance with the report compiled by BitStacker.
This reaffirms the truth that there may be unequal steadiness of buying and selling quantity among the many 1000’s of cryptocurrencies and it gives a warning in opposition to speculating on crypto cash with a low liquidity, the report talked about.
“The truth that so many cryptocurrencies endure from a low liquidity or buying and selling quantity is one other reminder of how dangerous it may be to take a position in a few of the smaller crypto cash,” mentioned Kris Lucas, a BitStacker.com analyst.
“In spite of everything, there may be nothing stopping an unregulated cryptocurrency change from creating statistics that overvalue a selected coin,” he added.
The researchers tracked 6,656 crypto cash, and solely 2.30 per cent of those cryptocurrencies had been categorized as having a very good liquidity.
Liquidity is a time period used to check with the buying and selling quantity of an asset. The liquidity metric used within the examine goals to focus on these crypto cash which have a low each day buying and selling quantity, or these cryptocurrencies the place the trades happen in a really restricted variety of exchanges.
“Such an understanding of liquidity is beneficial in that it could possibly clarify greater than one thing like market capitalization. Specifically, it could possibly assist merchants perceive when it is likely to be tough to purchase or promote vital portions of any crypto coin,” the report mentioned.
(This report has been printed as a part of the auto-generated syndicate wire feed. Other than the headline, no enhancing has been achieved within the copy by ABP Reside.)
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