Ether's Q3 Rally Came with a Catch: Thinning Liquidity

Ethereum's native token, $ETH, had a stronger third quarter than bitcoin, $BTC, but its liquidity took a hit. According to a report by CoinGecko, $ETH's price surged 70% in Q3, outpacing $BTC's 42% gain. However, its median daily market depth between July 6 and September 30 was only 35% to 45% of $BTC's, a stark drop from last year's figures.

Market depth is a measure of liquidity, with higher numbers indicating more money available to trade without moving the price. $ETH's market depth within 0.15% of its market price was around $13 million to $14 million, which is relatively low. In fact, this number is lower than it was last year, when it was at least 60%.

While $ETH is still considered fairly liquid, with most exchanges maintaining over $1 million in depth on each side, it's not the only major token with thin markets. $SOL, a rival to $ETH, has also seen a significant drop in liquidity, with its depth within 2% of the market price falling from $28 million to around $20 million.