Bitcoin liquidity is expected to remain thin during the holiday season, according to analyst Caroline Mauron of Orbital Markets. The collapse of Alameda Research, which facilitated significant trading volume, has contributed to the current lack of liquidity in the crypto market.
Traders are awaiting fresh capital inflows, particularly in anticipation of the SEC’s review of several exchange-traded fund (ETF) applications. Mauron predicts that there will be increased volatility in the crypto market leading up to the ETF decision deadline in early January, exacerbated by poor liquidity during the holiday period.
Lower liquidity can make it more challenging to sell cryptocurrencies due to a shortage of counterparties, potentially affecting the sustainability of bullish rallies. However, the approval of US spot Bitcoin ETFs could bring new money into the industry and improve liquidity.
Investment firm VanEck predicts that Bitcoin ETFs could attract over $40 billion in inflows within the first two years of trading, which could help address the current liquidity issues in the cryptocurrency market.
Source: BE(in)CRYPTO
