The Cryptocurrency Market Suffers from Shockingly Low Levels of Liquidity

CoinMarketCap, the leading cryptocurrency data tracking services platform, recently rolled out a new metric, dubbed Liquidity. Its primary purpose is to provide the “real trading activity” of most of the cryptocurrencies and crypto exchanges in the industry. An early glimpse shows a lack of institutional investment, adding credibility to the belief that 99% of all cryptos are worthless.

According to the chief strategy officer at CoinMarketCap, Carylyne Chan, the methodology to rank cryptocurrencies and crypto exchanges by daily volume lost its value and is now an obsolete metric in the industry. The firm is now moving into a new system that “highlights what matters most to investors and traders, [which is] liquidity.”

With the lack of transparency in the crypto market, it is easy for people to inflate trading volumes. According to Chan, individuals can insert orders into order book where they essentially buy and sell to themselves. These types of practices are even available for a small fee that guarantees that tokens and exchanges have enough “volume.”


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