Ethereum’s Q3 Rally Hides Thinning Liquidity Concerns
Ethereum’s native token, ether, surged nearly 70% in the third quarter of 2026, outperforming Bitcoin’s roughly 42% gain. Despite this impressive rally, a CoinGecko analysis highlighted a concerning trend: the liquidity supporting the price surge was noticeably thinner than expected. The data, cited by CoinDesk on October 5, 2026, covered the period from July 6 to September 30 and revealed that ether’s market depth now sits at only 35% to 45% of Bitcoin’s equivalent level, a significant drop from at least 60% in the comparable period of 2025.
Typically, rising prices and trading volumes correlate with deeper liquidity, but ether’s third quarter broke this pattern. Prices and volumes increased, yet liquidity contracted relative to Bitcoin. This trend was not unique to ether; Solana also showed a similar decline in liquidity. In contrast, XRP’s total depth held steady, with a notable tilt toward buyers. By the end of the quarter, ether closed near $2,689 after reaching intraday highs near $2,775, while Bitcoin traded between $83,640 and $86,000.
The research pointed to returning inflows into US spot ETH ETFs as a likely driver of the rally, with net inflows reaching approximately $3.1 billion. However, ETF demand can push prices higher without necessarily adding depth to exchange order books. Thinner order books mean higher slippage, which could impact traders executing large orders. Desks may need to split trades into smaller pieces or spread them across venues to minimize market impact.
Shallow liquidity can amplify both rallies and selloffs, as buyers quickly chew through sell orders. The broader trend of thinning liquidity across major non-Bitcoin assets raises questions about whether market makers are concentrating their capital more heavily in Bitcoin. The XRP exception suggests this trend is not universal, but the Solana parallel warrants closer monitoring.