Bitcoin News Update: Is the Recent Decline in Crypto Liquidity a Short-Term Hurdle or a Permanent Change in Market Structure?

Bitget App

Trade smarter

Bitget-RWA2025/11/20 22:44

By:Bitget-RWA

- October 2025 crypto crash reduced Bitcoin/ETH order-book depth by 30-25%, signaling structural liquidity withdrawal by market makers. - Stablecoin sector lost $840M since Nov 15, compounding fragility as weak volumes amplify price swings from routine trades. - Macro factors like ETF outflows ($360M weekly), Fed policy shifts, and Trump's tariff removal deepen liquidity challenges. - Thinner liquidity regime increases volatility risks for delta-neutral strategies, with even minor macro events triggering s

The cryptocurrency market crash in October 2025, which wiped out billions in open interest and sparked a mass withdrawal of liquidity, continues to weigh heavily on digital asset trading.

As reported by CoinDesk Research

, the order-book depth for

Bitcoin

(BTC) and

Ether

(ETH) remains significantly below pre-crash levels, indicating that market makers are still hesitant to return. This reduced liquidity has left the market more vulnerable, increasing the likelihood of dramatic price movements during normal trading or unexpected economic events.

In early October, Bitcoin’s average order-book depth at 1% from the mid-price was $20 million, but by mid-November, it had fallen to $14 million. Meanwhile,

ETH’s depth in the same range declined from $8 million to $6 million

. Analysts pointed out that this trend shows a "purposeful scaling back of market-making activity," setting a new standard for liquidity on centralized platforms. Alternative coins such as

Solana

(SOL),

XRP

, and ATOM rebounded more quickly after the panic but are still well below their pre-October liquidity, with

significant liquidity shortages persisting at key price levels

Bitcoin News Update: Is the Recent Decline in Crypto Liquidity a Short-Term Hurdle or a Permanent Change in Market Structure? image 0

Adding to the problem is a broad reduction in stablecoin supply, which has further undermined the market’s ability to absorb shocks. Since November 15, the stablecoin market has contracted by about $840 million,

with tokens such as Ethena’s USDe and csUSDL suffering sharp drops

. With fewer stablecoins available and trading activity subdued, even small sell-offs can now lead to disproportionately large price changes.

Broader economic factors have also contributed to the liquidity crunch.

Outflows from ETFs, changing expectations for Federal Reserve policy

, and a lack of strong underlying drivers have made market makers more cautious.

Data from CoinShares revealed $360 million in net outflows

from digital asset investment products in the week ending November 1, including nearly $1 billion withdrawn from bitcoin ETFs. At the same time, Trump’s trade decisions,

such as the recent directive to lift tariffs

, and

updated deficit projections from the CBO

, highlight the ongoing economic uncertainty.

The impact of diminished liquidity is extensive.

Delta-neutral and volatility trading strategies now encounter greater risks

, as slippage and exaggerated price fluctuations become more frequent. For instance, an unexpected macroeconomic announcement—like a higher-than-anticipated CPI—could spark sharp corrections. On the other hand, a sudden surge in risk appetite could drive rapid rallies, as the lack of liquidity intensifies upward moves as well.

With the end of the year approaching, the market remains on unstable ground. Although some altcoins have shown relative strength, Bitcoin and Ether are still operating in what analysts call a “thinner liquidity regime,”

according to CoinDesk Research

. Whether this represents a short-term adjustment or a lasting change for the crypto sector is still unclear, but for now, traders must contend with a market where even routine trades can carry outsized risks.

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

PoolX: Earn new token airdrops

Lock your assets and earn 10%+ APR

Lock now!

- U.S. stocks closed lower Thursday as macroeconomic fears and Fed policy uncertainty drove Nasdaq over 2% down, with Bitcoin hitting $86,100. - Abu Dhabi's ADIC nearly tripled its stake in BlackRock's Bitcoin ETF to $520 million, signaling institutional confidence amid crypto volatility. - CME FedWatch reduced December rate cut odds to 43.8%, while Bitcoin ETFs saw $75M inflows on Nov. 19 despite broader crypto selloffs. - Institutional caution persists as ETF outflows and whale selling tighten liquidity,

Bitget-RWA•2025/11/21 01:04

Bitcoin Updates: Institutional Investors Continue Buying Bitcoin Despite Market Sell-Off in Stocks and Cryptocurrencies

Bitcoin News Update: Waning Expectations for Rate Cuts and Massive Bitcoin ETF Outflows Trigger Sharp Stock Decline

- U.S. stocks fell sharply on Thursday, with the Nasdaq Composite dropping over 2% amid fading Fed rate-cut hopes and Bitcoin ETF redemptions. - Bitcoin prices dipped to $86,100 as BlackRock's IBIT ETF recorded a $523M outflow, marking its worst redemption since January 2024. - Institutional investors added $5.7M in Bitcoin short positions, while FedWatch data cut December rate-cut odds to 46% from 93.7% a month ago. - U.S. spot Bitcoin ETFs face $3B in November outflows, with analysts noting a shift from

Bitget-RWA•2025/11/21 01:04

Bitcoin News Update: Waning Expectations for Rate Cuts and Massive Bitcoin ETF Outflows Trigger Sharp Stock Decline

Fed Navigates Uncertainty as Data Gaps Obscure Rate-Cut Decision

- U.S. Treasury Secretary Bessent urges Fed to continue rate cuts to support growth amid volatile markets and weak labor data. - Delayed September jobs report and 183% October layoff surge cloud Fed's December decision amid inflation concerns. - Market expectations for a 25-basis-point cut dropped to 42.9% as Fed officials split between hawkish caution and dovish relief calls. - Strong Nvidia earnings temporarily eased AI bubble fears but analysts warn of limited capital budgets amid macro risks. - Global

Bitget-RWA•2025/11/21 01:04

Fed Navigates Uncertainty as Data Gaps Obscure Rate-Cut Decision

Zcash Halving Event: Driving Value Growth and Prompting Miner Adjustments

- Zcash's 2028 halving will cut block rewards to 0.78125 ZEC, reinforcing its deflationary model and potentially boosting investor demand. - Historical data shows 500% price surges post-halving (2020) and $589 peak in 2025, with Grayscale managing $137M in Zcash assets. - Miners transitioned to PoS post-2024 halving; ECC's 2025 roadmap prioritizes privacy upgrades and institutional adoption via Ztarknet and NU6.1. - Risks include regulatory scrutiny of shielded transactions and volatility, but decentralize

Bitget-RWA•2025/11/21 01:04