JPMorgan: BTC Liquidity Expected To Stay Resilient Subsequent To Volatility Shock

JPMorgan anticipates BTC liquidity would get back, though it may take a couple of days as market conditions even out.

Bitcoin’s fifteen percent sell-off earlier this week took place as leveraged long positions were rapidly liquidated. Nevertheless, since then, the market seems to have stabilized, signifying “the worst of liquidations are behind us” JPMorgan Chase & Co. analysts mentioned recently.

In a report, the analysts mentioned,

“A recovery in the hashrate and signs of more efficient arbitrage trading suggests liquidity should continue to improve from here.”

The report added,

“Going forward, bitcoin liquidity should remain robust and resilient; depth on major exchanges has continued to drop less and recover faster than other asset classes.”

The aforementioned report further mentioned the distinctive value of 24/7 admittance to steady and stable liquidity pools in digital asset markets, which might boost inclusive stability.

As per the report, the sell-off was

“likely exacerbated by the prevalence of high-frequency market making, which we estimate makes up ~80% of on-screen liquidity on major cryptocurrency exchanges and is prone to runs when threatened by a spike in volatility.”

Though it will take a couple of days to play out, history suggests liquidity would recover rapidly, the report concluded.