Bitcoin Liquidity ‘Likely to Remain Resilient’ After Volatility Shock, JPMorgan Says

Bitcoin Liquidity ‘Likely to Remain Resilient’ After Volatility Shock, JPMorgan Says

Bitcoin's (BTC) 15% sell-off earlier this week occurred as leveraged long positions were quickly liquidated, but since then, the market appears to have stabilized, suggesting "the worst of liquidations are behind us,“ JPMorgan Chase & Co. analysts wrote on Wednesday."A recovery in the hashrate and signs of more efficient arbitrage trading suggests liquidity should continue to improve from here,“ the analysts wrote in a report."Going forward, bitcoin liquidity should remain robust and resilient; depth on major exchanges has continued to drop less and recover faster than other asset classes.“The report also mentioned the unique value of 24/7 access to consistent and stable liquidity pools in cryptocurrency markets, which could encourage overall stability.The sell-off was "likely exacerbated by the prevalence of high-frequency market making, which we estimate makes up ~80% of on-screen liquidity on major cryptocurrency exchanges and is prone to runs when threatened by a spike in volatility.“"Though it will take a few days to play out, history suggests liquidity should recover quickly.“The contents of the JPMorgan report were reported earlier by Bloomberg News.Related StoriesBitcoin Liquidity 'Likely to Remain Resilient' After Volatility Shock,