Token Liquidity Plummets: 40% of Cryptocurrencies Take a Beating

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By Jessica Yangon Dec 03, 2018
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More than half of cryptocurrencies are no longer active and nearly 60% of projects are stuck in “hibernation”. Exchanges have finally decided to clean up these “zombie tokens”.

The entire cryptocurrency market is now suffering from a “Great Depression”.

Market Takes a Dive

Recently, according to a report issued by digital currency analysis company Diar, the prices of cryptocurrencies have plunged 80–95% from the beginning of the year. Token volumes have also taken a dive across major exchanges, with 60% of cryptocurrencies trading at lower volumes than January. A startling 41% of cryptocurrencies are seeing less than 75% of the trading volumes they saw in January. 

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The article The Truth About the Crypto Crisis says that OnChainFX data reveals over 80% of cryptocurrencies have less than $10 million in 30-day trade volume. GitHub commits were only in the single to double digits per quarter.

Over half of cryptocurrencies have become swamped in a vicious spiral, leaving investors reluctant to touch them anymore.

As cryptocurrency liquidity plummets, the market has become less dynamic and less vibrant.

RatingToken shows that nearly 60% of projects have gone into “hibenation” as market conditions decline. Almost a third of Telegram groups (290 projects with a market cap over $5 million are active on Telegram) have been mentioned in fewer than 300 conversations in the past 30 days. In other words, these groups have fewer than 10 conversations on average per day, meaning they are basically “dead”.

Trading Volumes on Different Crypto Exchanges Vary Dramatically

Diar also pointed out that liquidity differs dramatically between different exchanges.

In October, all tokens listed on Poloniex had lower trading volumes than at the start of the year. While for Bittrex, only three tokens saw an increased trading volume between October and January. About half of the tokens listed on Binance saw an increase in trading volumes between these two months while the other half suffered a decline.
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(Poloniex, Bittrex and Binance)

OKEx and Huobi were the two outliers (see chart below). On OKEx, there were 100 currencies in October with trading volumes 75% higher than January. On Huobi, 58 listed tokens saw trading volumes up 50–75%.
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(OKEx and Huobi)

Exchanges Began Removing Tokens with Weak Trading Volumes

On November 27, OKEx announced it was delisting a third swathe of trading pairs with weak liquidity and trading volumes. The platform plans to close the withdrawals of 26 tokens from 5am on Dec 14, 2018 (CET).

On November 28, Huobi published the Token Management Rules, consisting of 22 articles in total. According to the rules, the project teams should disclose information on Huobi Coinbook (its previous project display center) in the form of semi-monthly reports or quarterly reports. For particular incidents, the project teams should make a temporary disclosure within 24 hours. Huobi also indicated that they would conduct inquiries and investigations on project teams. Irregularities would be punished, including adding “ST” warnings to stop trading, hiding trading pairs and even closing trading.

A spokesman from Huobi said the launch of the Token Management Rules was done in an effort to increase transparency, advance the progress of industry compliance and ultimately bring about a win-win situation for the parties concerned.

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