A new report by Kaiko reveals that liquidity in privacy altcoins has fallen to an all-time low of $5 million. This decline in liquidity accelerated especially after OKX exchange delisted many privacy #altcoin because they did not meet certain criteria and Binance, the largest cryptocurrency exchange, also took action on this issue.
Privacy Altcoins and Increasing Regulatory Barriers
Privacy token liquidity, measured at 1 percent market depth for Monero (XMR), #Zcash (ZEC), DASH and ROSE, hit an all-time low last week after OKX exchange removed several trading pairs from its platform for failing to meet listing criteria. fell to millions of dollars. Although trading volumes have gradually increased since October, they are still well below 2021 levels.
Increasing regulatory pressures have particularly affected altcoins such as XMR and ZEC, while leading cryptocurrency exchanges such as Binance have pushed altcoins to the brink of delisting due to low liquidity.
The changing landscape across the market with pressure on privacy altcoins follows several notable developments seen particularly at the end of 2023 and the first week of the year. During last week's selloff, trading volume on South Korean cryptocurrency exchanges reached its highest level in recent years. Bitcoin's (BTC) share of transaction volume generated rose to 32 percent, a level not seen since 2020, amid an overall decline in altcoins' transaction volume.
This shift in trading dynamics comes despite increasing regulatory pressure in South Korea, including proposed rules for cryptocurrency exchanges and a ban on purchasing cryptocurrencies with credit cards.
With these changes in privacy altcoins and the overall cryptocurrency market, Solana (SOL) in particular has been witnessed standing out and showing a positive trend. During this period, SOL's trading volume occasionally exceeded the cumulative volume of Bitcoin and Ethereum (ETH) on several exchanges, a rare event in the cryptocurrency world. This increase in SOL's market share attracted attention as it pointed to changing dynamics in the altcoin market, especially against ETH.
SEC's Spot Bitcoin ETF Decision Could Rock the Market
Today, the US Securities and Exchange Commission (SEC) is expected to announce its decision on Ark Invest's spot Bitcoin ETF application. The SEC is expected to give mass approval or mass rejection for the spot Bitcoin ETFs that are in front of it. Regardless of the US regulator's decision, market volatility is expected to increase.
Bitcoin closed last week on a positive note after its recent decline that resulted in hundreds of millions of dollars of liquidation. Before the crash, market indicators such as price drift signaled trouble. Slippage rates on major cryptocurrency exchanges such as Binance, Coinbase, and Kraken rose above 0.02 percent on January 2, indicating worsening liquidity even as the price of Bitcoin hovered around $45,000.
The futures market also paints a picture of an overheated market. Open interest on Bitcoin perpetual futures in US dollars reached $10 billion at the beginning of December 2023, the highest level since November 2021, and remains at historic levels. This increase in open interest reveals that the leverage ratio in the market has increased. Additionally, high volumes in the options markets, particularly Bitcoin options on Deribit, indicate traders are expecting high volatility in light of the spot ETF decision.
