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One observer said poor order book depth is primarily responsible for bitcoin’s rally, while others pointed to the cryptocurrency’s sound money appeal and Fed pivot speculation as bigger catalysts.
Low liquidity means wave of buy or sell orders can have an outsized impact on bitcoin’s market price.
Cathy Wood’s fund bought COIN and SQ on Thursday and Friday last week after Coinbase tumbled on getting hit with a Wells Notice and Block took a hit following a short-seller’s report.
ALSO: Sam Reynolds writes that decentralized derivatives platforms are having a liquidity problem. The shortage may stem from crypto traders current caution, but at least one analyst is optimistic that the situation will change.
Coinbase’s former CTO, among others, has predicted that bitcoin will reach $1 million as the dollar fades, but these doomsayers are ignoring other historical precedents.
But the largest cryptocurrency by market capitalization is still up about 16% in March. Ether dropped below $1,800.
Yields on liquidity pools are paying out as much as 800% annualized as users rush to claim ARB tokens.
Coinbase shares tumbled 16% Thursday, after the company disclosed late Wednesday it had received a Wells Notice from the Securities and Exchange Commission.
Arbitrum is decentralizing by launching its governance token ARB.
Some remain upbeat about the medium-term outlook for bitcoin and the broader market.