The aggregated 2% market depth of Bitcoin has recently reached a one-year high of $623.40 million as of Nov. 16, up from $422 million on Nov. 5, indicating a significant boost in liquidity over a short period of time. This surge in liquidity reflects a growing market confidence, as deeper liquidity typically signifies increased participation from traders and institutions, helping to mitigate price volatility.
This increase in market depth leading up to and following the US presidential election is not an isolated event but part of a broader shift in macroeconomic and political conditions. The election of Donald Trump and his administration’s stated support for Bitcoin and the crypto industry through tangible policies have spurred heightened market activity.
The alignment of political interests with the crypto space has likely reassured institutional and retail investors, signaling a potentially more favorable regulatory environment and reducing perceived risks, thus encouraging greater involvement. This positive sentiment has been reflected in the market’s response, with traders interpreting the news as a signal for broader adoption and institutional inflows.
The surge in market depth, coupled with the price rally, indicates that market participants were reacting to the election results and positioning themselves for a sustained bullish trend. The increased market depth allows for larger orders to be executed with minimal slippage, a crucial factor in a market experiencing rapid price movements.
The impact of the election is also evident in the bid versus ask depth, with sell orders slightly outweighing buy orders. However, the market efficiently absorbed the sell-side pressure, highlighting strong buyer demand even as Bitcoin surpassed $93,000.
The dominance of the US market in global market depth has played a significant role in driving this surge in liquidity, with American institutions and traders shaping market activity throughout 2024. Bitfinex’s rise as the leading exchange in global market depth during Bitcoin’s post-election rally suggests its ability to attract liquidity amid political and market shifts.
On the other hand, Binance’s declining market share may be attributed to ongoing regulatory scrutiny, deterring institutional players despite the overall market optimism. These trends are reflected in the market share of aggregated 2% market depth held by specific exchanges.
Overall, the post-US election period has seen a significant boost in Bitcoin liquidity, driven by increased market confidence and a more favorable regulatory outlook, signaling a positive trajectory for the cryptocurrency market.
