The cryptocurrency market's depth declines
For the past six months, many cryptocurrencies have lingered in a pretty narrow range. This is due to a lack of factors capable of significantly affecting prices and the continued outflow of capital. The latter reason is best illustrated by a decline in crypto exchanges' reserves, which have dropped to 2 million BTC.
Market players prefer independent storage and transfer their coins to cold wallets after making a purchase. Interest in active speculation is dropping. This is also seen in the decline in the market's depth (the volume of orders in both directions from the current price) following the collapse of FTX in November 2022.
The trend is true for both Bitcoin and altcoins.
A decline in the crypto market's depth poses several threats. First, the amplitude of price fluctuations that can be triggered by minor events increases. Second, there's an increased risk of price manipulation, where a large market maker sets a movement in their desired direction to then dump tokens.
In late August, for example, the market faced such effects after news emerged of Grayscale's interim victory over the SEC. In four hours, Bitcoin jumped from $26,000 to $28,000 and, a day later, returned to the starting point. Ripple (XRP) had a more significant journey in July when we warned why "The victory is short-lived".
In this situation, crypto supporters prefer the most stable strategy: buy and hold. MicroStrategy, the largest public Bitcoin holder, announced yesterday that it has bought 5,445 coins at an average price of $27,000 over the past two months.
The company now has reserves of 158,245 BTC worth $4.2 billion at an average purchase price of $29,600. According to MicroStrategy CEO Michael Saylor, Bitcoin will reach $500,000 in the next 10 years.
StormGain Analytical Group
(platform for trading, exchanging and storing cryptocurrency)