Liquidity Crunch Hits Crypto, Bitcoin and Ethereum Face Buy-Side Decline

Coingapestaff
July 4, 2023 Updated May 16, 2025
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Recent data from Crypto Quant reveals a decline in sell-side liquidity across various digital assets, including Bitcoin and Ethereum with an even sharper drop in buy-side liquidity. The repercussions of these liquidity changes have prompted discussions about their interpretation, especially in light of Bitcoin’s price going up due to increased institutional interest.

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Liquidity Plummets In Crypto Market

According to statistics, Bitcoin’s exchange reserve has dwindled by 20% over the past year, amounting to 2.092 million. This reduction in available Bitcoin holdings on exchanges suggests a decreased willingness among investors to sell or trade their Bitcoin.

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In a similar vein, Ethereum’s exchange reserves have experienced an even steeper decline, plummeting by 40% to reach 16 million.

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Another key aspect affected by this liquidity shift is the stablecoin market. Stablecoins, which aim to maintain a stable value by being pegged to a fiat currency, have encountered a sharp decline in reserves. The collective reserves of stablecoins have shrunk by 52%, amounting to 16.93 billion. Read More about top stablecoins…

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BTC-ETH Price Action

Ki Young Ju, CEO of Crypto Quant, highlights that even though stablecoin reserves have diminished, there has been a recent uptick in buy-side liquidity. He suggests that when the ratio of stablecoin market capitalization or exchange holdings is high, there is a relatively high probability of market bottoming out.

Ju further notes that the current market capitalization of stablecoins, in relation to Bitcoin and Ethereum, remains relatively low. Another Twitter user said- stablecoin transition period due to $BUSD, and it doesn’t necessarily link to the buy-side liquidity declining. For instance, $USDT exchange reserve is increasing, as reported by Head of Research, Crypto Quant.

Bitcoin, the leading digital asset, kicked off the Tuesday business day in Asia with a strong surge past the $31,000 mark. Starting at $31,153, Bitcoin’s rally follows a wave of optimism fueled by several prospective issuers re-filing their applications for Bitcoin exchange-traded funds (ETFs). Bitcoin’s price has surged to $31,045.69, at the press time, marking a 1.25% increase, while Ethereum has reached $1,959.29.

Also Read: DeFi Rockets, NFTs Plummet as Ethereum Bulls Set Sight on $2,000

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Investment disclaimer: The content reflects the author’s personal views and current market conditions. Please conduct your own research before investing in cryptocurrencies, as neither the author nor the publication is responsible for any financial losses.
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Why Trust CoinGape

CoinGape has covered the cryptocurrency industry since 2017, aiming to provide informative insights Read more…to our readers. Our journal analysts bring years of experience in market analysis and blockchain technology to ensure factual accuracy and balanced reporting. By following our Editorial Policy, our writers verify every source, fact-check each story, rely on reputable sources, and attribute quotes and media correctly. We also follow a rigorous Review Methodology when evaluating exchanges and tools. From emerging blockchain projects and coin launches to industry events and technical developments, we cover all facets of the digital asset space with unwavering commitment to timely, relevant information.

About Author
About Author
CoinGape comprises an experienced team of native content writers and editors working round the clock to cover news globally and present news as a fact rather than an opinion. CoinGape writers and reporters contributed to this article.
Investment disclaimer: The content reflects the author’s personal views and current market conditions. Please conduct your own research before investing in cryptocurrencies, as neither the author nor the publication is responsible for any financial losses.
Ad Disclosure: This site may feature sponsored content and affiliate links. All advertisements are clearly labeled, and ad partners have no influence over our editorial content.