Crypto Liquidity Mirage: The Hidden Risks in Bitcoin & Ethereum Markets

The cryptocurrency market often presents a facade of deep liquidity that can vanish during periods of stress, creating a "liquidity mirage." This phenomenon poses significant risks for traders and investors in major digital assets like Bitcoin (BTC) and Ethereum (ETH). While order books may appear robust under normal conditions, large trades can quickly deplete this liquidity, leading to heightened volatility and slippage. This analysis delves into the structural issues within crypto exchanges and trading venues that contribute to this illusion. Understanding the true depth of the market is crucial for risk management, especially for institutional participants. The article emphasizes the need for more transparent and resilient market infrastructure to support the growing asset class's maturation and stability.