Bitcoin Dominance Wrecks Altcoin Liquidity
A recent study by CoinGecko reveals that Bitcoin's market dominance has led to a significant gap in liquidity between it and major altcoins, such as Solana (SOL) and Ethereum. The study analyzed spot orders on eight platforms from July 6 to September 3 and found that market depth for SOL has decreased by approximately 29%, while Bitcoin's market conditions have improved.
The analysis showed that at comparable percentage deviations from the market price, Ethereum's liquidity stood at 35-45% of BTC's level, down from at least 60% in the previous study. This indicates that the improvement in Bitcoin trading conditions is not yet a recovery of liquidity for the entire crypto market.
One platform, MEXC, emerged as a leader in providing liquidity for SOL and DOGE (Dogecoin) at prices closest to the market rate among the eight platforms sampled. However, when expanding the range by more than 20 cents in either direction, Bitget and Coinbase took the lead.
The disparity between exchanges is particularly noticeable with DOGEDogecoin exhibited the lowest liquidity among the five assets studied, with an aggregate order volume on one side of the order book within a ±2% range around $9-12 million, roughly half that of SOL. Yet, Solana's market capitalization was approximately five times larger; cryptocurrency size and available liquidity do not scale in direct proportion.