Bitcoin market depth
On a relatively new exchange like the Antigua-based FTX, the order book depth, as represented by the number of buy and sell orders at each price, now matches the depth seen on industry leader BitMEX. One derivative seeing growth is bitcoin perpetuals, a form of futures contract, but without an expiry date and thus without a settlement.
Perpetuals have a funding rate that occurs every eight hours and traders holding a position at the funding timestamp receive or pay funding. The bid—offer spread is the difference between the prices quoted for an immediate sale and an immediate purchase for an asset.
The larger the gap, the greater the spread. A small spread implies a highly liquid market and vice versa.
While that is true, the liquidity gap between bitcoin market depth two has reduced substantially over the past two months. The spread tends to widen dramatically during a price crash when traders offload large quantities of assets within a short period of time. However, even then, BitMEX was reporting a lower spread than other exchanges. FTX consistently reported a higher spread before the March crash and for nearly 2.
Notably, FTX registered a spread of 2. On that day, the spread on BitMEX was 0.
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- Market Depth, o profondità del mercato, è per definizione la capacità di un mercato di sostenere degli ordini di una certa portata senza che essi influiscano sul prezzo stesso.
Bitcoin market depth, volumes have since tapered off to levels seen in January this quarter, although the decline is not just limited to FTX and is seen across major exchanges. Notably, Deribit, which is the largest options exchange by volume, contributed just 1.
Looking forward, both Deribit and bitFlyer and other exchanges are likely to see higher liquidity because institutional participation is expected to increase over the long run. The coronavirus crisis has established bitcoin as a macro asset, according to Messari analysts.
Further, legendary macro traders like Paul Tudor Jones II have recently thrown their weight behind bitcoin as a inflation-hedge asset. Related Stories.