Solana and Ethereum Liquidity Plunges, Sharp Price Moves Ahead
Liquidity in the Solana altcoin has declined sharply in recent months, with order book depth within 2% of its current price falling by 29% from last year.
According to CoinGecko data, the value of buy and sell orders within 2% of Solana's (SOL) market price was around $28 million on each side last year.
This year, that figure has dropped to $20 million, indicating a significant weakening of the outstanding orders available to absorb large trades.
As a result, trades of the same size may now be more likely to move the price further, leading to sharper price movements in both rallies and declines.
The narrowing of SOL's 2% range points to a reduced capacity to absorb large buying and selling pressure, which could have implications for investors.
A similar contraction is also evident in Ethereum (ETH), with order book depth within 0.15% of ETH's market price falling from $13 million to $14 million last year to around $10 million this year.