Ether's Rally Outpaces Bitcoin but Market Liquidity Declines
In the third quarter of this year, Ether (ETH) surged by 70%, outperforming Bitcoin (BTC), which saw a 42% gain. Despite this strong price performance, Ether's market liquidity relative to Bitcoin has significantly declined. Between July 6 and September 30, Ether's median daily market depth was only 35% to 45% of Bitcoin's, a sharp drop from at least 60% in the same period last year.
Market depth measures the dollar value of buy and sell orders near the current price. While Ether had roughly $13 million to $14 million of order book depth within 0.15% of its market price, this depth was significantly lower compared to Bitcoin's. Most exchanges still had more than $1 million of depth on each side of the book, indicating that Ether remains fairly liquid but less so relative to Bitcoin.
The data suggests that Ether's rally did not attract more trading activity, contradicting the common belief that rising prices bring deeper order books. This weaker liquidity relative to Bitcoin could make Ether's rally more fragile, as the same buying or selling pressure could have a larger effect in a thinner market.
Other large-cap tokens showed mixed results. Solana's liquidity also weakened, with its depth within 2% of price falling from about $28 million per side last year to around $20 million this year. XRP held steady at around $30 million in total depth, with a slight lean toward buyers. At the time of publication, Ether was trading at $2,699.50, while Bitcoin was at $58,558.63.