Investors have been eyeing particularly low liquidity in crypto trading as market makers turn cautious. as Investors Weigh Debt Ceiling Debate, Liquidity Concerns.
Bitcoin rade week with gains, moving above $27,000 from as low as $25,800 late on Friday.
By the data analysis from the CoinDesk the number one cryptocurrency by market value, recently trading at over $27,350, up around 1.6% in the previous day. Bitcoin was below than $27,000 till late Sunday after dropping below $26,000 on Friday.
Edward Moya, senior market analyst at foreign exchange market maker Oanda, suggested in a Monday note that upcoming debt ceiling talks will “tell us a lot if investors believe bitcoin can behave more of a safe-haven despite all the regulatory uncertainty.”
“Bitcoin seems poised to stay in a range, but if risk aversion triggers a de-risking moment, we could see selling pressure extend below last week’s low,” Moya wrote.
Ether (ETH) the second-biggest cryptocurrency by market value got more than 1% to be traded at over $1,830 on Monday afternoon.
Among other digital assets, LDO, the governance token for the liquid staking platform Lido, surged 11% to trade at $2.15, while indexing protocol The Graph’s GRT token jumped more than 12% to trade at $0.12.
The success of the whole cryptocurrency market can be measured by the CoinDesk Market Index (CMI), which raised by over 1.8% for the day.
Investors have been weighing the low liquidity of late in crypto markets, with market makers Jane Street and Jump Crypto last week retreating from crypto trading in the U.S. due to regulatory uncertainty. Crypto data firm Kaiko’s report on Monday showed that BTC’s 1% market depth – a gauge that measures liquidity conditions – dropped 4% over the past month, while ETH’s slid 2%. Altcoin liquidity suffered even worse, down roughly 17% on a monthly basis.
“Due to the dire state of the stock market, institutional and professional investors no longer have access to the excess liquidity they would usually allocate to invest in the crypto market,” Sheraz Ahmed, managing partner at blockchain consultancy Storm Partners, told CoinDesk.
The 2-year Treasury note’s price in bond markets was nearly unchanged on Monday at 4.00%, but the 10-year Treasuries note’s price climbed 3 basis points to 3.50%.
Greg Cipolaro, global head of research at bitcoin-focused investment firm NYDIG, pointed out in a Friday research note that yield curve inversions similar to the current one have more often than not indicated a recession in the next 12 months.
Investors this week across the board will be eyeing several economic readings for indications of a slowdown, including U.S. monthly retail sales and housing data.