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Topic: [2019-11-13] Crypto Space Has Shockingly Low Total Liquidity of $500 Million (Read 293 times)

legendary
Activity: 3948
Merit: 3191
Leave no FUD unchallenged
The crypto market is a piddly weakling at present. There are many, many more vested interests in stocks and forex so it could be argued that those markets are less organic than something that collapses in a few minutes on the basis of raw panic, but either way crypto is still a minnow.

Perhaps.  But, arguably, the traditional markets have a much greater dependency on HFT.  I'm still curious what will happen with everyone's preconceived notions about the importance of liquidity when a government somewhere inevitably implements one of those "Robin Hood Tax" systems that make them pay per trade.  That way, rather than spamming thousands of trades per second to target a desired price, they'll be forced to wait until the genuine price they want to buy or sell at.  I'm sure it'll have a profound effect on market rigging, price discovery and overall trade volumes in general.

And, since crypto generally doesn't play by the rules, it's unlikely exchanges would be in any hurry to implement such a tax, if ever.  Perhaps that would tempt some of the traditional traders to head on over to our side and bump up the numbers a little, heh.
hero member
Activity: 1330
Merit: 569
https://cryptoiq.co/the-crypto-space-has-shockingly-low-total-liquidity-of-500-million-or-less-and-numerous-top-exchanges-caught-faking-their-volume/

It's extremely silly measuring liquidity entirely by what's on order books, plenty more will be sitting on the sidelines. Also with things as comatose as they've become it won't bear any resemblance to the more muscular periods of time.

All the same there are some pretty comical figures such as - Bibox that has volume of $1.05 billion and liquidity of $300,000, ZB that has volume of $483 million and liquidity of $310,000.

I will guess that the real figures for most of the exchanges clogging up the scene probably require another two zeroes removing, or just a good old zero.

This is just one aftermath of non-regulation in the market that gives room for people to manipulate others into making a decision in which they are not capable of doing. This is something that really be frowned upon but unfortunately, we will only make comments and there is nothing to be done about it. The next exchange site is probably doing the same thing. While companies operating in the economy might one way or the other wants to make their book looks good, liquidity is something they don't touch because that is one thing that could really be verified just by circulating the banks and this makes them careful but companies operating in crypto, its just a free for all and that what they are taking advantage of.
legendary
Activity: 2590
Merit: 3015
Welt Am Draht
The truth is really the opposite - cryptos are much more liquid compared to even forex to the average consumer/investor, with much lower spreads and faster clearance times - you name it.

Erm, how did you end up with that conclusion? Though I think this particular figure is a bit silly I don't disagree with the overall gist.

The crypto market is a piddly weakling at present. There are many, many more vested interests in stocks and forex so it could be argued that those markets are less organic than something that collapses in a few minutes on the basis of raw panic, but either way crypto is still a minnow.

It's kind of unhelpful to compare the present to normal markets, but the same goes for the height of bubbliness too. I'm looking forward to much less boom and bust but am wondering when and if it'll arrive.
hero member
Activity: 1666
Merit: 753
The sheer lengths that these people are willing to go to in order to discredit and slander BTC in the slightest way Roll Eyes

It's obvious what they are presenting is a fallacy, but when presented to the untrained eye, they can obviously fool some people and inspire FUD regarding the crypto market not having sufficient liquidity to fulfill everyone's transactional needs.

The truth is really the opposite - cryptos are much more liquid compared to even forex to the average consumer/investor, with much lower spreads and faster clearance times - you name it.
legendary
Activity: 3542
Merit: 1965
Leading Crypto Sports Betting & Casino Platform
I think liquidity is only a problem when you cannot control it, but as we have seen during the 2017 "boom" period, exchanges just fake a "system overload" when things get out of control and then they blame it on capacity issues. This is very similar to the Banks closing their doors when there are a Bank run.

I think exchanges are no more liquid than most Banks or other financial industries and this has become the norm with most of these centralized operations.  Roll Eyes
legendary
Activity: 2170
Merit: 1427
We all know more than 90% altcoins are joke. Suppose I have 500K Waves which worth around $350K in present market. CMC says market volume is $11M which means me selling 500K WAVES shouldn't have much effect on the market price because it's just 3% of the market volume. But dare I sell those 500K WAVES and believe me market will crash like hell, it is possible that market price of Waves will fall below $0.40 from present $0.75
It's actually much worse than you think. At Binance, which is the exchange with the highest altcoin liquidity, market selling 500,000 waves will result in the price to flash crash to below $0.10 which just shows how difficult it is to exit at once with these altcoins if you have a large position.

I stopped believing alts all together now, these are joke. It's better to stick with Bitcoin and work for the development of Bitcoin as universally accepted currency/asset rather than trying to make profits out of shitcoins having no real value and utility.
Nothing wrong with trading altcoins left and right with proper risk management, but the problem is that you can't possibly know what coin to choose beforehand in current market. In 2017's bull run you could blindly buy an altcoin and still make 500-1000% profit, but that doesn't work anymore. Retailers are rekt and they might not come back anymore for a similar pump.
hero member
Activity: 1680
Merit: 655
If you pattern it out with the traditional stock brokers we have as compared to crypto exchanges you will see that crypto exchanges aren't that different at all. You see stock brokers even though they handle huge deals in the stock market aren't that liquid at all but what happens is they can still manage to handle big withdrawals as they themselves have other assets to liquidate when that happens. And isn't it obvious why we have limits built into our accounts? It's not just to limit our trades but also our withdrawals from the exchanges these prevents sudden liquidity problems. Their worst possible scenario is something that we don't have to worry about since they can still manage with them also holding moving assets around.
sr. member
Activity: 504
Merit: 250
Do they have any idea what actual liquidity means?

Simply put, not all liquidity is put on orderbooks, as you say. What is a much better measurement is how much demand there is at a particular point, regardless of whether or not that demand is reflected on orderbooks of exchanges.

A simple example would be OTC trades, or P2P traders. Both of them are prominent components that contribute to BTC's liquidity, yet they don't show up on any exchange's orderbooks by nature.
legendary
Activity: 1918
Merit: 1728

I have been following the volumes at messari and they have consistently dropped in the last months. Not so long ago the daily volume on messari for Bitcoin fell below $100 million, which is an absolute joke. CMC kept reporting double digit billion $ volumes. They don't even care about fake volumes anymore despite their 'promise' for drastic changes.

We all know more than 90% altcoins are joke. Suppose I have 500K Waves which worth around $350K in present market. CMC says market volume is $11M which means me selling 500K WAVES shouldn't have much effect on the market price because it's just 3% of the market volume. But dare I sell those 500K WAVES and believe me market will crash like hell, it is possible that market price of Waves will fall below $0.40 from present $0.75

I stopped believing alts all together now, these are joke. It's better to stick with Bitcoin and work for the development of Bitcoin as universally accepted currency/asset rather than trying to make profits out of shitcoins having no real value and utility.
legendary
Activity: 1652
Merit: 1483
I have been following the volumes at messari and they have consistently dropped in the last months. Not so long ago the daily volume on messari for Bitcoin fell below $100 million, which is an absolute joke.

that's what happens during consolidations. it's especially obvious in triangles---volume is totally dead by the end. that's one of the reasons i'm pretty sure $7296 was the bottom even though things look a little grim right now. that push to $10.5k was done on massive volume, the biggest since the june top.
legendary
Activity: 2170
Merit: 1427
Liquidity should be used to determine how easily can one convert fiat money like USD or Pound to Cryptocurrency and such markets should be considered for determining liquidity. Proper title for this CoinMarketCap addition should be like 'Non-manipulated Volume' or 'Real Volume'.

Fair point.

I prefer to focus on https://messari.io/screener for volume. It's obviously not a guatantee that these volumes are 100% real, but at least they are far more realistic considering the exchanges (Binance, Bitfinex, Bitflyer, Bitstamp, Bittrex, Coinbase Pro, Gemini, itBit, Kraken, and Poloniex) they fetch the data from. The difference between the volumes here and the volumes shown on CMC is massive.

I have been following the volumes at messari and they have consistently dropped in the last months. Not so long ago the daily volume on messari for Bitcoin fell below $100 million, which is an absolute joke. CMC kept reporting double digit billion $ volumes. They don't even care about fake volumes anymore despite their 'promise' for drastic changes.
legendary
Activity: 2590
Merit: 3015
Welt Am Draht
I think liquidity should be universal.

There are no shortage of alts with truly pitiful levels of liquidity in BTC so people should be informed of that too.

I guess this article has settled on the USD as most outsiders only look at the ways in or out of the whole thing but it's equally relevent elsewhere.
legendary
Activity: 1918
Merit: 1728
My question is what liquidity are we talking about? Is it crypto/crypto or crypto/fiat or total of both? The story changes entirely depending upon the basis on which liquidity is calculated.

The article signifies the new Liquidity option launched by CoinMarketCap (looks more like a PR article to me). But CoinMarketCap is only considering crypto/crypto pairs to determine 'Liquidity'. I don't think term liquidity is meant for the crypto/crypto volume. Liquidity should be used to determine how easily can one convert fiat money like USD or Pound to Cryptocurrency and such markets should be considered for determining liquidity. Proper title for this CoinMarketCap addition should be like 'Non-manipulated Volume' or 'Real Volume'.
legendary
Activity: 2590
Merit: 3015
Welt Am Draht
the chart actually makes it look like the fake volume was keeping a lid on the price throughout 2016. probably just a coincidence though.

It looked to me like since the 2013 bubble the West would build up the price, the Chinese casinos would poo on it and the West would run crying for mummy until they felt brave enough to do the same thing again. It seemed to happen like clockwork.

As soon as China was gone things seemed to loosen up massively.
legendary
Activity: 1652
Merit: 1483

Does this mean that the entire 2017 bull run was consequence of fake volume? The wild upward trend coincides with suspiciously high volume which was fake if that's what you're saying?

on the contrary, the 2017 bubble took off after the chinese exchanges turned off the volumizer bots. they did so because the government was investigating them.

the chart actually makes it look like the fake volume was keeping a lid on the price throughout 2016. probably just a coincidence though.
hero member
Activity: 1008
Merit: 531
Jesus... I always knew some of the numbers that were brought up by companies like ZW, BMW, and some other exchanges were likely fake, but I didn't know the statistics where this exaggerated.

It seems like the majority of the exchanges that are looking to fake their volume have a goal of creating insane profits off IEOs, and often at times, they would buy up the IEO's tokens themselves, or pump the market right after, so all of the IEO's held on their platform would be classified as successful.
legendary
Activity: 2590
Merit: 3015
Welt Am Draht
Does this mean that the entire 2017 bull run was consequence of fake volume? The wild upward trend coincides with suspiciously high volume which was fake if that's what you're saying?

I think it's quite possible all of these bull runs started off with some fakery. But then real people take over. There's no way 2017 finished up fake. Witness all of the exchanges buckling, some turning away new custom, nutters and ads all over Youtube. None of that can be faked.

In 2013 people were taking out loans and selling their children in just the same way near the end.

It is a little strange how in recent times the start of these price explosions coincided with Bitfinex having problems. Same goes for Gox back in the day.
legendary
Activity: 2884
Merit: 1115
Leading Crypto Sports Betting & Casino Platform
Perhaps it wasn't 100% clear-cut, but it was close enough for me to be convinced.  See this CoinDesk article from back in 2013.  In particular, this section:

At least the Chinese did a more convincing job of it than the current crop

huobi and okcoin were no more convincing than today's crop. people used to refer to their volume churning as "the volumizer" and everyone knew it was completely fake. on some days they did volume well into the millions of BTC on a single exchange. nobody bought that shit for a second lol. if you zoom out on the old bitcoinwisdom charts it's incredibly obvious when the volumizer was turned on and off:


Does this mean that the entire 2017 bull run was consequence of fake volume? The wild upward trend coincides with suspiciously high volume which was fake if that's what you're saying?
legendary
Activity: 2590
Merit: 3015
Welt Am Draht
huobi and okcoin were no more convincing than today's crop. people used to refer to their volume churning as "the volumizer" and everyone knew it was completely fake.

The difference is that we all knew it was zero fee so it's quite possible real people were participating in the churn a decent proportion of the time. It's rather different from many of the places now with a $10 order book and $50 million in volume fizzing away 1 cent above it.

I'm not even sure some of them permit real people to get on to those markets. Someone who wants to cash in to buy their coffee could completely crash them.
legendary
Activity: 1652
Merit: 1483
Perhaps it wasn't 100% clear-cut, but it was close enough for me to be convinced.  See this CoinDesk article from back in 2013.  In particular, this section:

At least the Chinese did a more convincing job of it than the current crop

huobi and okcoin were no more convincing than today's crop. people used to refer to their volume churning as "the volumizer" and everyone knew it was completely fake. on some days they did volume well into the millions of BTC on a single exchange. nobody bought that shit for a second lol. if you zoom out on the old bitcoinwisdom charts it's incredibly obvious when the volumizer was turned on and off:

legendary
Activity: 2590
Merit: 3015
Welt Am Draht
Perhaps it wasn't 100% clear-cut, but it was close enough for me to be convinced.  See this CoinDesk article from back in 2013.  In particular, this section:

At least the Chinese did a more convincing job of it than the current crop, but I well remember the occasional moment when their bots stopped stoking it and their exchanges died instantly. Even if there were some real people as well it was nothing but zero fee froth.

I could never get over how mindless the press were in eulogising China's trading 'dominance' when it could be debunked with twenty seconds of research. The death of those exchanges is probably the biggest factor in the price being set free. For some reason the West would run screaming every time those 3-4 Chinese teenagers dumped on them.
legendary
Activity: 3948
Merit: 3191
Leave no FUD unchallenged
Back in the day you could never quite be sure. Now it's there out in the open. Witness those exchanges with trillions in volume but $4 on the buy side yet the trades magically happen just above it.

Perhaps it wasn't 100% clear-cut, but it was close enough for me to be convinced.  See this CoinDesk article from back in 2013 as an example.  In particular, this section:

Quote
In his article posted on 20th December on Xueqiu, one of China’s most popular investors’ social media platforms, Shi claims that in a two-hour period on 19th December, OKCoin’s data indicates that over 30,000 BTC changed hands.

However, by comparing the number with the tally of selling and buying orders that were displayed separately, Shi concluded that the real transaction volume could be as low as one tenth of what the company purported to exchange.
legendary
Activity: 2590
Merit: 3015
Welt Am Draht
Fake volume has always been a thing the entire time I've been involved in crypto. 

There's definitely been an explosion in laughable junk in recent times. Back in the day you could never quite be sure. Now it's there out in the open. Witness those exchanges with trillions in volume but $4 on the buy side yet the trades magically happen just above it.

It's good that CMC are starting to do something about it. Shame that they got powerful enough for it to become a problem.
legendary
Activity: 3948
Merit: 3191
Leave no FUD unchallenged
Fake volume has always been a thing the entire time I've been involved in crypto.  Not only is it nothing new, but it's not even unique to crypto.  Fiat businesses try to pad their numbers where they can, so it looks good for investors.  Companies about to float on the stock market often have giveaways, or two-for-one deals, basically whatever special offers they can get away with so they can give the impression they're moving a greater amount of products than they normally would be.  Anything to pump up the numbers. 

The only differences in crypto are that it's easier to obfuscate and manipulate figures due to pseudonymity and there are currently fewer regulations to adhere to.
legendary
Activity: 2968
Merit: 3684
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Why is that shocking? Think the entire ICO space in 2018 sort of knew this, which is why almost every other "solution" was about liquidity. Which is why exchange listing is such a big sub industry in itself, which is also why DEXs gained momentum (though still never to the level I had really hoped they would be).

Not really much of a concern for non-serious traders though. People who need things to happen don't really care about orderbooks and go OTC, maybe even staggered p2p as a last resort.
legendary
Activity: 2590
Merit: 3015
Welt Am Draht
https://cryptoiq.co/the-crypto-space-has-shockingly-low-total-liquidity-of-500-million-or-less-and-numerous-top-exchanges-caught-faking-their-volume/

It's extremely silly measuring liquidity entirely by what's on order books, plenty more will be sitting on the sidelines. Also with things as comatose as they've become it won't bear any resemblance to the more muscular periods of time.

All the same there are some pretty comical figures such as - Bibox that has volume of $1.05 billion and liquidity of $300,000, ZB that has volume of $483 million and liquidity of $310,000.

I will guess that the real figures for most of the exchanges clogging up the scene probably require another two zeroes removing, or just a good old zero.
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