Recent declines in the cryptocurrency markets are largely attributed to liquidity strains faced by market makers, potentially driven by recent massive liquidations. Industry experts suggest that this ongoing turmoil could persist for weeks, impacting Bitcoin, Ethereum, and broader crypto assets. As market makers, who provide essential liquidity, grapple with holes in their balance sheets, the crypto ecosystem faces continued volatility and uncertainty. Market maker liquidity issues are believed to have contributed to recent crypto market declines following the October 10 crash. Massive liquidations — totaling $20 billion — have caught market makers off guard, forcing them to shrink their balance sheets. Crypto analyst Tom Lee compares market makers to central banks, emphasizing their crucial role in maintaining market liquidity. Bitcoin has retraced from over $121,000 to approximately $86,900 amid the ongoing liquidity crunch. Experts suggest a potential weeks-lon...
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