At a glance
A number of compounding factors sent crypto markets to a low in 2022, which was only further exacerbated by digital assets being increasingly correlated to traditional markets and negative macroeconomic moves. Additionally, a set of impactful industry-changing events caused a shift in how market participants perceive digital assets. The resulting plunge in crypto prices and corresponding liquidity crunch sent retail investors running for cover, while institutional participants tried to mitigate risk and weather the bear market’s volatility. Furthermore, the fall of one of the biggest players in the space sent shockwaves throughout the system, further shrinking the market and intensifying the downturn.
The current market turmoil has led participants to prioritise risk management over trading opportunities, highlighting the importance of execution certainty that can only be ensured by robust and established liquidity providers. These providers play an integral role in stabilising markets and help ensure markets are resilient, even under the most difficult circumstances. To this end, it is of the utmost importance that liquidity providers create infrastructure that enables access to assets on demand across countless venues. This facilitates all types of trading, especially over-the-counter (OTC) trading, which has seen an influx of activity in the latter half of 2022 as institutions looked to offload risk.