Viewpoint: Due to the lack of US dollar payment channels, the crypto liquidity situation may worsen.

On March 24th, Kaiko Research, a data provider in the encryption market, believed that the encryption market had experienced quite a few liquidity events this month. They believe that although the data show that the liquidity of cryptocurrencies has rebounded to the level of early March, in the long run, the situation may become worse.

Interpretation of this information:

Kaiko Research, a data provider in the encryption market, has observed that the encryption market has been experiencing numerous liquidity events this month. Although the data shows that the liquidity of cryptocurrencies has rebounded to the level of early March, the situation may still worsen in the long run.

The term “liquidity event” refers to situations where the demand for a cryptocurrency exceeds the supply. This can cause the price of the cryptocurrency to increase, leading to speculative trading and a further increase in demand. However, when a significant number of investors attempt to sell the cryptocurrency at the same time, the market may experience a liquidity crunch, resulting in significant price drops.

March has been a particularly volatile month for cryptocurrencies. Market fluctuations have been driven by various factors, including rising interest rates and new regulations. The rise of non-fungible tokens (NFTs) has also created liquidity issues in the market. The sale of NFTs has caused some cryptocurrencies to experience a sudden surge in demand, resulting in some exchange platforms experiencing capacity problems.

Kaiko Research suggests that the current state of the encryption market is not sustainable. Although the liquidity of the market has improved in the short term, it could still face vulnerabilities in the future. As the demand for cryptocurrencies continues to grow, more investors may enter the market, leading to an increased likelihood of speculative trading and liquidity events.