Kaiko reports Alameda gap still exists

In a Nov. 6 report from Kaiko, a leading source of cryptocurrency market data, despite Bitcoin’s rally in October, the Alameda gap still exists one year after the FTX collapse.

Data shows that market depth is still 55% below pre-FTX levels.

Low volatility environment

Although bitcoin has seen a 20% surge in October 2023, the Alameda gap, also defined as the sharp decline in order book liquidity evident after the collapse of FTX and its sister company Alameda Research — has continued.

The 2% market depth for BTC, ETH and altcoins on centralized exchanges hovered at $800mn in data from last week, still well below pre-FTX levels.

While Kaiko likens this in part to the low volume and low volatility environment, which has kept advanced traders and liquidity providers away from the cryptocurrency market, the data provider also highlights there are also structural reasons, including market makers leaving the space after suffering losses or abandoning the digital asset market altogether after FTX. 

Following solvency concerns

The last year has kept much of the crypto community on the edge of their seats after the unfolding developments around the collapse of FTX, one of the world’s largest crypto exchanges. Kicked off by a report from CoinDesk highlighting potential leverage and solvency concerns, the volatile crypto market took a billion dollar hit, spurring on a liquidity crisis for the exchange.

In late December, now ex-CEO Sam Bankman-Fried was arrested in the Bahamas and extradited to the United States, pleading innocent to all criminal charges in January, with the jury later finding Bankman-Fried guilty on all charges.

With the market for cryptocurrencies like Bitcoin now on the uptick, the question remains, is the world ready to move past the FTX era?

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