Bitcoin Cash, a cryptocurrency that emerged as an offshoot of Bitcoin, is gaining attention among crypto traders looking for alternative cryptocurrencies in anticipation of market volatility. Market liquidity, which refers to the market’s ability to absorb large buy and sell orders at stable prices, is a crucial factor for these traders. A recent report by Paris-based crypto data provider Kaiko reveals that Bitcoin Cash experienced the most significant improvement in market liquidity during the third quarter.
Kaiko’s liquidity rankings are based on market depth measures, bid-ask spreads, and volumes from “tradable” exchanges. Since the collapse of Alameda Research in November last year, there has been a general decline in market liquidity. However, Bitcoin Cash stands out, topping the list with a more than 10% improvement in market liquidity since the second quarter. This outperforms other prominent altcoins and the market leader, Bitcoin.
Bitcoin Cash Prices and Market Performance
In the third quarter, Bitcoin Cash prices fell 23% to $234, following a 145% surge in the second quarter. Despite the decline in price, the 17th largest cryptocurrency by market value can be traded on well-known centralized exchanges such as Binance, Coinbase, Bitstamp, and institutional-backed crypto exchange EDX Markets.
Other Cryptocurrencies and Their Liquidity
Stellar’s XLM, TRON’s TRX, and Ethereum Classic (ETC) also experienced an improvement in liquidity conditions. In contrast, Bitcoin, Ether (ETH), XRP, and Dogecoin (DOGE) showed no change in their liquidity status. BNB Chain’s BNB, OKX exchange’s OKB, and Toncoin (TON) experienced a decline in liquidity.
Despite the improvement in Bitcoin Cash’s market liquidity, Bitcoin remains the most liquid cryptocurrency. This validates its appeal as the crypto market’s safe haven for traders and investors.
Implications of Market Liquidity for Crypto Traders
Market liquidity is essential for crypto traders, as it allows them to execute large orders with minimal slippage. Slippage occurs when the executed price of an order differs from the expected price due to insufficient liquidity. As a result, traders prioritize cryptocurrencies with higher liquidity to minimize the impact of slippage on their trades.
The improvement in Bitcoin Cash’s market liquidity indicates that it is becoming an increasingly attractive option for traders looking to diversify their portfolios. With its growing liquidity, Bitcoin Cash may see increased trading volumes and interest from both retail and institutional investors.
Factors Contributing to Bitcoin Cash’s Improved Liquidity
Several factors may have contributed to the improved market liquidity of Bitcoin Cash. One possible reason is the increased adoption of the cryptocurrency for transactions and payments. As more businesses and individuals use Bitcoin Cash for everyday transactions, its liquidity naturally improves.
Another factor could be the growing interest in alternative cryptocurrencies as traders seek to diversify their portfolios. With Bitcoin’s dominance in the market, many investors are looking for other cryptocurrencies with potential for growth and stability. Bitcoin Cash, with its improved liquidity, may be an attractive option for these investors.
Conclusion
In summary, Bitcoin Cash experienced the most significant improvement in market liquidity during the third quarter, according to data from Kaiko. This development makes it an increasingly attractive alternative cryptocurrency for traders anticipating market volatility. While Bitcoin remains the most liquid cryptocurrency and the market’s safe haven, the improved liquidity of Bitcoin Cash and other altcoins such as Stellar’s XLM, TRON’s TRX, and Ethereum Classic (ETC) offers traders more options to diversify their portfolios and minimize the impact of slippage on their trades.
