Altcoin Liquidity Wanes as Market Appetite Fades
There has been a reduction in liquidity within the altcoin market, signifying a decreased interest in risk-on assets, according to analytics platform Glassnode.
According to their latest analysis, Glassnode highlights that various key altcoin indicators are currently at their cycle lows, which is indicative of a weakened market. The firm elaborates on the situation, noting that liquidity is diminishing across digital assets, with network settlements, exchange interactions, and capital flows all at cycle lows.
This underscores the prevailing apathy in the market. While long-term holders are holding strong, with their supply reaching new all-time highs, HODLer growth remains robust, causing the active tradeable supply to tighten.
Despite the fluctuating valuations of altcoins, which are symptomatic of the current low liquidity environment, Glassnode’s new altcoin framework, modeling the waterfall effect of capital rotation, suggests that a risk-on regime is not currently in effect. This aligns with the limited liquidity available for digital assets.
In addition, Glassnode observes that the “Hot Supply” metric for Bitcoin (BTC), which measures the volume of coins transacted within the last week, indicates that BTC market liquidity is approaching levels last seen in previous bear markets.
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This drop in market liquidity becomes evident when comparing the Hot Supply to its long-term mean minus 0.5 standard deviations. Based on this comparison, Glassnode has created a framework that highlights periods of low and contracting market liquidity, with Hot Supply falling below the Mean -0.5 SD level.
These highlighted areas reveal that the current liquidity conditions are akin to those experienced during the 2014-15 and 2018-19 bear markets, with this condition persisting for 535 days.
Alexander Stefanov
Reporter at CoinsPress
Alex is an experienced finance journalist and a cryptocurrency and blockchain enthusiast. With over five years of experience covering the industry, he deeply understands the complex and constantly evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His passionate approach allows him to break down complex ideas into accessible and insightful content. Follow up on his content to be up to date with the most important trends and topics - stay ahead of the curve with CoinsPress.
