CRYPTO MOVERS AND PRICES
CRYPTO STORY OF THE DAY
We Wanted To Address The Mid-Level Coins And Their Generally Precarious Liquidity Dynamics - Overall, The Widely Quoted 'Market Caps' Are Not Indicative Of Where Any Kind Of Size Can Be Sold - Marked-To-Liquidity The Crypto Ecosystem Beyond The Top 15 Coins Is Much Smaller Than Reported
For example purposes, let's consider Zcash (ZEC), a relatively well-known crypto which has a market cap (price x coins in circulation) of USD ~220M, making it the ~30th largest. At the height of the 2017/18 rally, Zcash had a market cap of over USD 2.5B and traded 10s of millions in volume a day. Now, a quick look of the markets where it is traded on coinmarketcap show a series of pairs which, as usual, are well known to be untrustworthy. The most active trustworthy pairs are ZEC/BTC and ZEC/USDt traded on Binance. An investigation of those order books shows an extremely 'thin' situation. In the ZEC/USDt order-book, a sale of USD 150k equivalent would move price down in the range of 20%. In spite of seeing slightly higher volumes on the session, the ZEC/BTC order-book is even more thin. The most active, trustworthy, crypto/fiat pair in ZEC/USD is on Bitfinex (BFX) which has only posted USD 70k in volume in the last 24-hours. Other exchanges such as Gemini, Kraken and Coinbase have posted similar volumes to BFX with order books thinner than those of Binance.
Crypto Takeaway: If spot market liquidity has shrunk in BTC, the situation is magnitudes worse in the mid-level alt-coins. While marked-to-market versus marked-to-liquidity is a consistent debate in finance, the situation is particularly troubling outside of the Top ~15 cryptocurrencies. Furthermore, for the most part, these protocols have limited treasury or earnings potential that could act as a back-stop for buybacks were mass liquidations to occur from large holders. Coins outside of the Top 10 only make up 10% of the total crypto market cap or about ~20B using top of book prices. Those values, deserve to be severely haircut.