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’s unequal steadiness of buying and selling quantity among the many hundreds of cryptocurrencies and it offers a warning towards speculating on crypto cash with a low liquidity, the report talked about.
“The truth that so many cryptocurrencies undergo from a low liquidity or buying and selling quantity is one other reminder of how dangerous it may be to invest in among the smaller crypto cash,” mentioned Kris Lucas, a BitStacker.com analyst.
“In any case, there’s 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 superb liquidity.
Liquidity is a time period used to confer with the buying and selling quantity of an asset. The liquidity metric used within the examine goals to spotlight these crypto cash which have a low every 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 helpful in that it might probably clarify greater than one thing like market capitalization. Particularly, it might probably assist merchants perceive when it could be tough to purchase or promote important portions of any crypto coin,” the report mentioned.
(This report has been printed as a part of the auto-generated syndicate wire feed. Aside from the headline, no modifying has been finished within the copy by ABP Reside.)
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