Crypto analytics firm Glassnode says that liquidity is drying up in the altcoin market as an appetite for risk-on assets declines.
In a new analysis, the firm says key altcoin metrics are at cycle lows indicating market weakness.
Liquidity continues to dry up across the digital assets as network settlement, exchange interaction and capital flows reside at cycle lows, heavily underscoring the current acute apathy experienced by the market.
The long-term holder cohort remains resolute as their supply continues to ascend to new ATHs (all-time highs) whilst HODLer growth remains robust, tightening the active tradeable supply.
Despite large fluctuations in valuation for altcoins, a symptom of the prevailing low liquidity environment, our new altcoin framework which simulates the waterfall effect of capital rotation suggests a risk-on regime is not in play, providing confluence to the lack of liquidity available to digital assets.
Glassnode also says that the Bitcoin (BTC) Hot Supply, metric, which measures the volume of coins that have transacted within the last week, indicates BTC market liquidity is reaching lows last seen in prior bear markets.
This lull in market liquidity is strikingly apparent when evaluating the Hot Supply metric
To demonstrate just how quiet the Bitcoin supply is, we compare the Hot Supply to its long-term mean minus 0.5 standard deviations.
From this, we construct a framework to highlight periods of low and contracting market liquidity, where Hot Supply is below this Mean -0.5 SD level. These highlighted areas show that the current liquidity conditions remain similar to the 2014-15 and 2018-19 bear markets, having been in this condition for 535 days.
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