Cryptocurrency markets, despite a total valuation of $2.49 trillion, face significant liquidity risks akin to those in traditional finance, according to Arthur Azizov, founder of B2 Ventures. The liquidity structure is fragile, with centralized exchange order books shrinking rapidly during market fluctuations, particularly for tokens outside the top 20 by market cap. This was evident during the 2022 market crash when even mainstream tokens experienced significant slippage.
The recent flash crash of the Mantras OM token highlights the vulnerability of market depth under pressure. Experts suggest that addressing these liquidity issues requires improvements at the protocol layer, including native cross-chain bridging and unified liquidity routing technologies. Currently, 70%-90% of stablecoin trading volume is automated, with technical bottlenecks being gradually resolved.
Cryptocurrency Markets Face Liquidity Risks Similar to Traditional Finance
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