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Home Cryptocurrency news

Cryptocurrency Exchange Order Books Are a Ghost Town, Data Shows

Tony Spilotro by Tony Spilotro
12 months ago
in Cryptocurrency news, Bitcoin
Reading Time: 3min read
cryptocurrency ghost town bitcoin crypto
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Last week, the cryptocurrency market collapsed alongside the stock market and the rest of the world of finance.

After the fallout, cryptocurrency exchanges have been left a ghost town, according to data extracted from order books of top trading platforms.

Cryptocurrency Exchange Order Books Empty, Market is a Ghost Town

Bitcoin and the rest of the cryptocurrency market experienced among one of the worst selloffs in the asset class’s short ten-year history.

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The collapse in cryptocurrencies hit alongside historic losses in the stock market, gold, silver, oil, and nearly every other market in the financial world, as investors seek to liquidate their assets into cash to hold through what is the closest event to an apocalypse the world has ever witnessed.

Related Reading | Cryptocurrency Market Panic Selloff Barely Fazed Long Term Holders 

The madness left the cryptocurrency market in shambles, and order books a ghost town, according to data extracted by one crypto analyst.

The analyst shows a comparison of liquidity in crypto exchange order books prior to the fall from $7,000 to under $5,000, against liquidity post drop to below $5,000.

Talking about low liquidity, this is XBTUSD at 7000s right before the drop, and at 5000s after.

Only orders above $1M are shown, truly a ghost town pic.twitter.com/ooG5wovVCf

— red (@redxbt) March 18, 2020

In the first chart, orders can be seen placed at various levels above and below the price action. In the second chart, nearly all of the orders that were once visible have been pulled.

It’s worth noting that the orders were filtered to only show any with a position size over $1 million or more, so there is still buying and selling activity, however, it is these large market maker type orders that are now missing.

Without liquidity, asset prices move rapidly and with extreme volatility, which is why we’re currently seeing hundred dollar price fluctuations back and forth, without a clear break of any range.

It’s a dangerous environment, as any large-sized orders can clear out what little exists in the order book, tanking prices as a result.

The madness could cause Bitcoin and other cryptocurrency assets to collapse to extreme lows. However, the lack of liquidity works both ways, and massive buy orders could drive up the price of the asset very quickly.

Related Reading | Market Cycle Psychology: Did The Cryptocurrency Market Just Enter Full Anxiety Phase?

The one caveat is that this may be a deterrent preventing bigger buyers from taking a position in Bitcoin, as any large buys could wipe out the order book and cause the buyer to pay increasingly higher prices per BTC as they drive the price up against themselves.

On the flip side, any large selling could also be deterred at this point, given the currently low prices and lack of liquidity being a recipe for disaster.

Any large selling at this point would be fueled by cryptocurrency investors willing to take a major loss and risk just to cash out amidst a crisis – however, such a scenario cannot be ruled out during a black swan event steeped in uncertainty.

Tags: bitcoinCrisiscryptoliquidity
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Tony Spilotro

Tony Spilotro

I'm Tony Spilotro. Behind the pseudonym, I'm a digital media executive and global remote work leader with a decade of content experience and excellent. Here, I explore my newfound passions pertaining to privacy, finance, economics, politics, cryptography, property rights, and other libertarian-esque views. I am a Bitcoin evangelist, maximalist, and educator whenever I can be, helping to spread its message of freedom from government control, monetary policy mismanagement, and passing the buck - literally – to future generations. My journey from a curious retail crypto investor to a serious Bitcoin advocate, trader, and technical analyst is an unusual one, but life-changing nonetheless and has become less about money and more about a long-overdue revolution. While a firm believer in the laws governing math and science, I am profoundly fascinated by the impact of astrology and astronomy including moon and solar cycles and planetary alignment and their ability to influence and potentially predict markets. It hasn't yet clicked for me as to how to put anything to use, but I consider it my current rabbit hole I can't yet dig out of. My perspective of growing up alongside the internet, the dot com era, the Great Recession, and roots in video games collecting coins and rare items caused Bitcoin to immediately make sense to me. Through all of these lenses, I seek to produce content that is educational and entertaining, and I thank you sincerely for taking the time to read what I have to say. Please follow me on Twitter and feel free to drop me a line if you would like to work together.

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