As main crypto exchanges like FTX go bankrupt amid excessive volatility, virtually 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 research 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 keeping with the report compiled by BitStacker.
This reaffirms the truth that there may be unequal steadiness of buying and selling quantity among the many hundreds of cryptocurrencies and it gives a warning towards 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 trade from creating statistics that overvalue a specific coin,” he added.
The researchers tracked 6,656 crypto cash, and solely 2.30 per cent of those cryptocurrencies had been categorized as having an excellent liquidity.
Liquidity is a time period used to check with the buying and selling quantity of an asset. The liquidity metric used within the research goals to spotlight these crypto cash which have a low day by 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 may possibly clarify greater than one thing like market capitalization. Specifically, it may possibly assist merchants perceive when it is perhaps troublesome to purchase or promote vital portions of any crypto coin,” the report mentioned.
(This report has been revealed 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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