Bitcoin Cash Sees Biggest Liquidity Jump in Q3, Bitcoin and Ether Lag: Kaiko

Liquidity refers to market's ability to absorb large orders at stable prices.

AccessTimeIconOct 11, 2023 at 6:34 a.m. UTC
Updated Oct 11, 2023 at 7:24 a.m. UTC

Crypto traders anticipating market volatility and looking for the best alternative cryptocurrencies (altcoins) may want to consider bitcoin's (BTC) offshoot, bitcoin cash (BCH).

That's because, according to Paris-based crypto data provider Kaiko, Bitcoin cash saw the most improvement in market liquidity during the third quarter.

Liquidity refers to the ability of the market to absorb large buy and sell orders at stable prices. The greater the liquidity or market depth, the lower the slippage – the difference between the price a trader expects to pay and the price they actually pay – and the easier it is for large traders to execute big orders.

Kaiko's liquidity rankings are based on market depth measures, bid-ask spreads, volumes from "tradable" exchanges. Overall, there has been a broad-based decline in market liquidity since Alameda Research went bust in November last year.

BCH tops the list, with AVAX registering highest liquidity drain. (Kaiko)
BCH tops the list, with AVAX registering highest liquidity drain. (Kaiko) (Kaiko)

The chart shows bitcoin cash's market liquidity improved by over 10% since the second quarter, outshining other prominent altcoins and market leader bitcoin.

Bitcoin cash prices fell 23% to $234 in the third quarter, marking a pullback from the second quarter's 145% surge. The 17th largest cryptocurrency by market value can be traded on prominent centralized exchanges like Binance, Coinbase, Bitstamp and institutional-backed crypto exchange EDX Markets.

Stellar's XLM, TRON's TRX, and Ethereum Classic (ETC) also witnessed an improvement in liquidity conditions. Bitcoin, Ether (ETH), XRP, an Dogecoin (DOGE) registered no change, while BNB Chain's BNB, OKX exchange's OKB, and Toncoin (TON) saw a decline in liquidity.

"TON had the worst underperformance [relative to its market cap], as most of its volume is on HTX, which was removed for suspected artificial volumes; the token was not considered liquid on any exchange," Kaiko said in the quarterly report.

Overall, bitcoin remained the most liquid cryptocurrency, validating its appeal as the crypto market safe haven.

Edited by Parikshit Mishra.


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Omkar Godbole

Omkar Godbole is a Co-Managing Editor on CoinDesk's Markets team.