Bitcoin and the broader crypto market have begun to wake up recently, but underlying liquidity conditions appear extremely weak, according to on-chain analytics firm Glassnode — a development that echoes concerns raised in CoinDesk’s November analysis about a void in crypto market liquidity following the October crash.
Latest data from Glassnode shows that despite the price climb, both Bitcoin spot trading volume and total altcoin spot trading volume have fallen to their lowest levels since November 2023, a discrepancy that typically indicates declining market participation and fragile demand behind the recent strength.
Spot trading volume is an indicator of actual buying and selling activity on an exchange and is a barometer of true trading interest.
Traditionally, healthy price increases have been supported by rising volumes as new capital and buyers enter the market. But in this case, instead of rising in line with prices, spot trading volumes fell to a one-year low, underscoring the lack of broad participation behind these moves.
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This assessment reiterates concerns raised in a research article published by CoinDesk in November, which documented how liquidity on centralized exchanges, including Bitcoin and Ethereum market depth, failed to fully recover following October’s liquidation cascade.
The study highlights that post-crash order depth remains structurally lower than before the sell-off, suggesting that the new, thinner liquidity baseline makes the market more susceptible to exaggerated price reactions.
The October incident, which saw $19 billion worth of leveraged positions wiped out in a matter of hours, did more than unwind excessive bets. It has reshaped the fundamental structure of the market, causing static liquidity to continue to fall back as market-making firms and liquidity providers retreat, leaving the market shallower and less able to absorb large trades without affecting price.
Bitcoin is up 7.5% since Jan. 1 and is currently trading at $93,500, but the move on minimal volume is raising some warning signs for traders.